This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at https://www.theguardian.com/business/live/2017/nov/28/bank-of-england-stress-tests-financial-stability-released-live
The article has changed 15 times. There is an RSS feed of changes available.
| Version 0 | Version 1 |
|---|---|
| UK banks pass stress test and could handle 'disorderly' Brexit, says Bank of England - live! | |
| (35 minutes later) | |
| The BoE’s Financial Policy Committee, set up to assess risks to the financial system, had judged that: | |
| The UK banking system could continue to support the real economy through a disorderly Brexit. | |
| However the combination of a disorderly Brexit and a severe global recession and stressed misconduct costs could result in more severe conditions than in the stress test,” the Bank said. | |
| Threadneedle Street confirmed that banks would be required to hold an extra £11.4bn in capital by next November, but will now review whether they will need to build an additional cushion in the future in light of the potential risks in the system. | |
| Mark Carney, governor of the Bank of England, said: | |
| The FPC is taking action to ensure the financial system is resilient to a very broad range of risks so that the people of the United Kingdom can move forward with confidence that they can access the financial services they will need to seize the opportunities ahead”. | |
| The seven main lenders lose £50bn during the stress tests which considered fall in GDP, collapse in the pound and record drop in house prices | |
| Here’s the official confirmation that Britain’s banks have enough capital to withstand a new financial crisis. | |
| We’ve published the results of our 2017 stress test. https://t.co/R5POyRlSCp pic.twitter.com/XwyVKQHzFI | |
| Importantly, the Bank of England has also found that Britain’s banks could cope with a “disorderly” Brexit without having to curb lending or be bailed out by taxpayers. | |
| High street lenders can withstand a disorderly Brexit according to the Bank of England even though RBS and Barclays struggled in latest health check on the banking sector | |
| @bankofengland says can't say what disorderly Brexit would look like, but banks could withstand it anyway. The assumption is wouldn't be worse than Bank's stress tests: 4.7% fall in unemployment, 9.5% unemployment etc. Cold comfort. | |
| Here we go! | |
| Britain’s seven largest lenders have passed the tough stress test posed by the Bank of England. | |
| This is the first clean slate since the tests were created in 2014, and suggests the sector is in relatively decent shape to survive the next recession. | |
| BUT! Barclays and Royal Bank of Scotland only passed because they have raised fresh capital during the course of 2017. | |
| More to follow! | |
| BofE Stress Tests “all 7 participating banks have sufficient capital to pass tests” | |
| BoE confirms no #bank needs to raise capital following #stresstest ...clear run now for #dividends ?! | |
| Today’s stress tests model the “doomsday” scenario for Britain’s banks, says Business Insider’s Will Martin. | |
| And here it is: | |
| In the UK economy, the BoE modelled the effects of a sharp recession of more than -4% GDP. This is accompanied by the pound collapsing to just $0.85, a fall of about a third from current values. | |
| Global growth is also hit, with banks tested on how they would cope with a worldwide contraction of 2.4%. This scenario also includes a collapse in Chinese commercial real estate of more than 40%. | |
| As a result, unemployment in the UK climbs higher than during the financial crisis. | |
| Commercial lending collapses, leading to disaster in the property market. House prices fall by 33% and commercial real estate loses 40% of its value. | |
| The Daily Telegraph’s Iain Withers compares today’s stress tests to classic computer game Sim City..... | |
| He writes: | |
| Fans of the blockbuster Nineties PC title SimCity 2000 will remember it as a fiendishly addictive city management game. Players built roads, homes, offices, shops, factories and utilities in what proved a surprisingly popular simulation of life as a city mayor. | |
| Sometimes the game would suddenly trash your city with an alien invasion, to test your mettle. A massive black metal spider-like creature would pop up on the screen and start razing parts of your lovingly crafted metropolis with laser beams. There was little you could do other than hunker down, wait for the alien to leave, put out the fires and rebuild. | |
| I fear today’s test may not be quite as much fun, though | |
| Good morning. We’re about to discover if Britain’s banking sector is strong enough to survive a new financial crisis.Bank of England has put the UK’s seven biggest lenders through a series of rigorous tests to see how they’d cope if the economy hit the rocks.The BoE’s stress tests model a serious financial downturn, at home and abroad. | Good morning. We’re about to discover if Britain’s banking sector is strong enough to survive a new financial crisis.Bank of England has put the UK’s seven biggest lenders through a series of rigorous tests to see how they’d cope if the economy hit the rocks.The BoE’s stress tests model a serious financial downturn, at home and abroad. |
| They examine if banks have enough capital to handle a sharp fall in UK and global growth, a surge in consumer bad debts, a plunge in the pound, and a jump in unemployment caused by higher interest rates. It will also test their long-term financial resilience. | They examine if banks have enough capital to handle a sharp fall in UK and global growth, a surge in consumer bad debts, a plunge in the pound, and a jump in unemployment caused by higher interest rates. It will also test their long-term financial resilience. |
| The seven lenders are Barclays, Royal Bank of Scotland, Lloyds, HSBC, Standard Chartered, Santander’s UK operations, and the Nationwide building society. | The seven lenders are Barclays, Royal Bank of Scotland, Lloyds, HSBC, Standard Chartered, Santander’s UK operations, and the Nationwide building society. |
| The results are released at 7am GMT, and will show which banks are best, and least, prepared for the next recession. | The results are released at 7am GMT, and will show which banks are best, and least, prepared for the next recession. |
| Banks whose exam paper comes back covered in red ink will face tough questions about their resilience. Any lender who actually fails the test forced to sell off assets or ask existing shareholders and bondholders for more cash. | Banks whose exam paper comes back covered in red ink will face tough questions about their resilience. Any lender who actually fails the test forced to sell off assets or ask existing shareholders and bondholders for more cash. |
| Last year Royal Bank of Scotland fell short, so it’ll be under particular scrutiny this year. A poor performance could undermine the UK government’s attempt to sell its majority stake in RBS. | Last year Royal Bank of Scotland fell short, so it’ll be under particular scrutiny this year. A poor performance could undermine the UK government’s attempt to sell its majority stake in RBS. |
| We already know that the lenders will suffer £30bn of losses on consumer loans under the tests. Today’s results will show where those losses are concentrated. | We already know that the lenders will suffer £30bn of losses on consumer loans under the tests. Today’s results will show where those losses are concentrated. |
| Adding to the fun, the Bank of England is also releasing its latest Financial Stability Report this morning. That will show the BoE’s view of the UK financial system, and the key threats to financial stability. | Adding to the fun, the Bank of England is also releasing its latest Financial Stability Report this morning. That will show the BoE’s view of the UK financial system, and the key threats to financial stability. |
| Our City editor Jill Treanor is locked in the Bank of England, reading the stress test now ahead of 7am. Here’s her preview: | Our City editor Jill Treanor is locked in the Bank of England, reading the stress test now ahead of 7am. Here’s her preview: |
| Here’s the agenda | Here’s the agenda |
| 7am GMT: UK bank stress tests released | 7am GMT: UK bank stress tests released |
| 7.30am GMT: Bank of England governor Mark Carney holds a press conference. He’ll discuss the stress test results and the BoE’s financial stability report | 7.30am GMT: Bank of England governor Mark Carney holds a press conference. He’ll discuss the stress test results and the BoE’s financial stability report |
| 10am GMT: OECD releases its latest economic outlook | 10am GMT: OECD releases its latest economic outlook |
| 1.30pm GMT: US trade balance for October | 1.30pm GMT: US trade balance for October |
| 2.45pm GMT: Federal reserve chair nominee Jay Powell’s confirmation hearing at the US Senate | 2.45pm GMT: Federal reserve chair nominee Jay Powell’s confirmation hearing at the US Senate |