Featured Product

    BoE Report on Evaluation of Approach to Concurrent Stress Testing

    April 24, 2019

    BoE published a report on the evaluation, by the Independent Evaluation Office (IEO), of the effectiveness of the approach of BoE to concurrent stress testing. Also published is the response of BoE to this evaluation. The IEO report finds that the approach is successfully delivering on its principal objective and recommends a number of ways that the stress tests could be improved further. IEO has set out ten recommendations around three main themes. The evaluation was primarily conducted between June 2018 and January 2019.

    The recommendations of the IEO fall under three themes. The first paves the way for more value to be extracted from this resource-intensive exercise, through suggestions to advance macro- and micro-prudential objectives. The second theme provides insights to guide BoE in enhancing delivery further by building efficiency and effectiveness. The final theme reflects on the challenges associated with communicating the stress test outcomes. It makes recommendations for ensuring that internal, public, and bilateral firm communications all support stress testing objectives to the fullest extent possible. 

    The report shows that concurrent stress testing is delivering value to policymakers, participating firms, and the industry more broadly. It serves both Financial Policy Committee (FPC) and Prudential Regulatory Committee (PRC) needs by providing insights into risks affecting the system and a common and comprehensive scenario to compare firms against one another. This allows policy making to be well- integrated and well-evidenced, which in turn supports significant credibility and accountability benefits. The openness of the exercise has proven to be particularly useful recently, as the tests have allowed BoE to communicate its view of the resilience of the banking system under various Brexit scenarios. However, the stress-testing framework is still maturing and, in this context, the IEO has seen some opportunities for refinement. 

    BoE is committed to implementing all of the recommendations by IEO. The BoE response to these recommendations details how BoE will respond to most of these recommendations. A small number of recommendations will require further work and BoE will report on these later in the year, as part of an update to its "approach to stress testing" document. The Annex to the BoE response summarizes the actions proposed by BoE. In February 2018, BoE's Court of Directors commissioned the IEO to conduct an evaluation of the effectiveness of BoE's approach to concurrent stress testing. The Court considered that an IEO evaluation at this juncture was appropriate, particularly as BoE was planning to review and update its approach to stress testing in 2019.

     

    Related Links

    Keywords: Europe, UK, Banking, Stress Testing, Concurrent Stress Testing, Recommendations, Brexit, IEO, BoE

    Featured Experts
    Related Articles
    News

    EBA Issues Revised List of Validation Rules for Reporting by Banks

    EBA published a revised list of validation rules in its implementing technical standards on supervisory reporting.

    December 10, 2019 WebPage Regulatory News
    News

    SRB Holds Annual Conference, Reflects on Turning Policy into Action

    SRB published a report on its fourth annual conference that was held on October 10, 2019 in Brussels.

    December 10, 2019 WebPage Regulatory News
    News

    OSFI Sets Domestic Stability Buffer Level at 2.25%

    OSFI has set the Domestic Stability Buffer, or DSB, at 2.25% of total risk-weighted assets, with effect from April 30, 2020.

    December 10, 2019 WebPage Regulatory News
    News

    FSB Examines Financial Stability Aspects of Bigtech and Cloud Services

    FSB published two reports that consider the financial stability implications from the offering of financial services by bigtech firms and the adoption of cloud computing and data services across a range of functions at financial institutions.

    December 09, 2019 WebPage Regulatory News
    News

    HKMA Proposes Changes to Module on Supervision of Concentration Risk

    HKMA issued a circular proposing revisions to the Supervisory Policy Manual module CR-L-1 on consolidated supervision of concentration risks under the Banking (Exposure Limits) Rules (BELR) Rule 6.

    December 09, 2019 WebPage Regulatory News
    News

    BoE Updates XBRL Filing Manual for Reporting Under Solvency II

    BoE has updated the XBRL filing manual (to Version 5.0) to help firms and software vendors create XBRL instance documents for Solvency II Pillar 3 and BoE Insurance reporting.

    December 09, 2019 WebPage Regulatory News
    News

    APRA Specifies Capital Treatment of Equity Investments in ABGF

    APRA published a letter to the authorized deposit-taking institutions outlining the regulatory capital treatment of their equity investments in the Australian Business Growth Fund (ABGF).

    December 09, 2019 WebPage Regulatory News
    News

    EBA Updates Guidelines on Reporting of Funding Plans of Banks

    EBA updated the guidelines on harmonized definitions and templates for the reporting of funding plans of credit institutions.

    December 09, 2019 WebPage Regulatory News
    News

    EBA Publishes Action Plan on Sustainable Finance

    EBA published the Action Plan on sustainable finance for banks.

    December 06, 2019 WebPage Regulatory News
    News

    EBA Single Rulebook Q&A: Second Update for December 2019

    EBA updated the Single Rulebook question and answer (Q&A) tool with answers to three questions under the Capital Requirements Regulation (CRR) and the second Payment Services Directive (PSD 2).

    December 06, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 4298