Eight UK banks to undergo "house price collapse" stress test

Graham_Devon

Eight UK banks and building societies will face so-called stress tests, to assess their resilience to an economic downturn, the Bank of England has announced.

The test will measure the impact of a "very severe housing market shock" and a sharp rise in interest rates.

That scenario will include unemployment rising to 12% and house prices falling by up to 35%.

The Bank said the tests would ensure the UK financial system's resilience.

The scenario also includes a collapse in the value of sterling, GDP falling by 3.5% below its level at the end of 2013 and consumer prices index (CPI) inflation rising to 6.5%.

Seems a pretty high bar to pass?

Thoughts on this? Could they pass? If they don't, they will be likely asked to increase capital reserves until the point they can cope presumably.

Apparently this time, the results of the tests wull be published fully, bank by bank, so that we the public can see where, if any, danger lurks. Before now, this was always done behind closed doors.

http://www.bbc.co.uk/news/business-27202546

CLAPTON

Graham_Devon wrote: »

Seems a pretty high bar to pass?

Thoughts on this? Could they pass? If they don't, they will be likely asked to increase capital reserves until the point they can cope presumably.

Apparently this time, the results of the tests wull be published fully, bank by bank, so that we the public can see where, if any, danger lurks. Before now, this was always done behind closed doors.

http://www.bbc.co.uk/news/business-27202546

presumably it means they have already been vetted and are scheduled to pass or nearly so

chucky

Stress tests have happened before and will happen again with the same or different results.

If they do something about the results is another discussion entirely.

Graham_Devon

CLAPTON wrote: »

presumably it means they have already been vetted and are scheduled to pass or nearly so

So, basically, you are suggesting it's yet another scandal?

CLAPTON

Graham_Devon wrote: »

So, basically, you are suggesting it's yet another scandal?

Well, it won't have been a formal vetting but obviously there have been extensive discussions and meetings so the general tenure of the BoE thinking will have been made clear.

No scandal just sensible planning : why would the BoE deliberately risk another banking crisis?

Graham_Devon

CLAPTON wrote: »

No scandal just sensible planning : why would the BoE deliberately risk another banking crisis?

It's not. It aims to suggest that they AVOID a crisis by making sure they increase capital, if required.

What makes you think this will cause a banking crisis?

You do realise that what you are suggesting here is collusion between the banks and the BOE to run a public stress test only on what they know will pass.

Which seems a bit, well, daft.

Afterall, you may aswell just keep it behind closed doors and on record if that;s what they wish to achieve.

CLAPTON

Graham_Devon wrote: »

It's not. It aims to suggest that they AVOID a crisis by making sure they increase capital, if required.

What makes you think this will cause a banking crisis?

You do realise that what you are suggesting here is collusion between the banks and the BOE to run a public stress test only on what they know will pass.

Which seems a bit, well, daft.

Afterall, you may aswell just keep it behind closed doors and on record if that;s what they wish to achieve.

the new MMR rules say that people that borrow money for mortgages should be able to afford the repayments
that tax payer funded exercise probably cost us several millions which I would indeed describe as daft.

Graham_Devon

CLAPTON wrote: »

the new MMR rules say that people that borrow money for mortgages should be able to afford the repayments
that tax payer funded exercise probably cost us several millions which I would indeed describe as daft.

Not sure what that has to do with what I asked you about your point, tbh.

Thrugelmir

CLAPTON wrote: »

presumably it means they have already been vetted and are scheduled to pass or nearly so

All European banks are undergoing proper stress testing at last. Previous tests haven't really addressed the issues on what's lurking on their balance sheets.

Thrugelmir

Graham_Devon wrote: »

Thoughts on this? Could they pass? If they don't, they will be likely asked to increase capital reserves until the point they can cope presumably.

Lend less as some banks are already doing.

Improve lending margins

Call on shareholders to raise more equity.

Cut dividends to retain more profit as reserves.


No more Government funded bank bailouts in the future.

CLAPTON

Thrugelmir wrote: »

Lend less as some banks are already doing.

Improve lending margins

Call on shareholders to raise more equity.

Cut dividends to retain more profit as reserves.


No more Government funded bank bailouts in the future.

so basically raise interest rates and cut off the recover overnight

ask investors for new money in exchange for reduced share price and reduced dividend as well

and cancel the 85k government guarantee for savers



what a fantastic vote winner for the conservatives

have you considered politics as a career?