Tiger Bridging Explains New Stress Tests Mean More Caution Likely from Big Banks
Earlier this week, the Bank of England launched this year's 'stress test' for UK banks. In stress tests, the Bank (in its role as regulator) asks financial institutions to model the effects on their balance sheet of hypothetical adverse scenarios. If banks find that they are not in a position to withstand these economic shocks, they are required to take steps to strengthen their balance sheets – usually meaning increasing their capital by lending less. This happened to the Royal...
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