Health Check for Banks
Tuesday, June 2, 2009 19:06
The City watchdog said that UK’s banks are to be tested for their ability to withstand the recession.
The Financial Services Authority published the details of gloomy scenarios used to assess the health of banks. It is currently testing against a hypothetical fall in overall GDP of more than 6%, with Britain in recession until 2011 and unemployment hitting 12%. The FSA said that the scenarios are not forecasts, but are deliberately designed to be severe. The tests were used on banks, such as Royal Bank of Scotland and Lloyds Banking Group, applying to dump ‘toxic’ assets in the Government’s taxpayer-backed insurance scheme. The watchdog said it will not publish the results as the tests are now part of its day-to-day supervision of the sector.
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