![Risk.net](https://www.risk.net/sites/default/files/styles/print_logo/public/2018-09/print-logo.png?itok=1TpHrpuP)
FSA stress test results will not be disclosed
The UK regulator takes a different approach to the US and follows the example set by the EU
LONDON - Details of the stress tests employed by the UK's Financial Services Authority (FSA) have been published by the City watchdog today, although it says the results for individual banks will remain secret.
The FSA statement confirms the UK approach differs from the tests carried out by the US Treasury on the top 19 US banks, the results of which were published earlier this month, revealing that 10 US banks required a combined $74.6 billion recapitalisation.
The regulator says the macro-economic parameters used within its approach fit within the European Union-wide stress-testing exercise on the aggregate banking system being co-ordinated this summer by the Committee of European Banking Supervisors (Cebs).
Like the Cebs exercise, no bank-specific results will be released, allaying government fears of a public call for recapitalisation that could require more state support. It says practices may change, and the tests themselves are an evolving tool.
The FSA acknowledges that the US model already rolled out has stoked "considerable interest" in the use of stress testing by authorities in Europe in response to the global financial crisis - especially in the wake of April's G-20 agreement on the need for collaborative international regulatory medicine.
There are no changes to Tier I minimum capital requirements - still standing at pre-crisis 4% levels for banks and 7% for building societies - and the FSA says it has deferred the issue to wait on EU updates to the Basel II framework, through the Capital Requirements Directive, to be debated in Brussels this summer.
The FSA says it has increased the use of stress tests over the past year and that they will form an integral element of its revised more intrusive "intensive" supervisory approach already outlined by the regulator's chief executive Hector Sants earlier this year.
It also says it has used stress tests for its state support policy decisions such as access to the Credit Guarantee Scheme and the Asset Protection Scheme in collaboration with its tripartite partners, the UK Treasury and Bank of England.
The FSA says its stress tests "are not forecasts of what is likely to happen but deliberately designed to be severe". However, the regulator adds that in evaluating a firm's ability to meet its stress scenario requirements, it might consider compelling management to take actions including evolving the balance sheet size, raising capital and asset sales.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@risk.net
More on Regulation
The standoff over separate account margining
CFTC issues sixth extension of no-action relief as long-awaited final rule stalls
Banks fret over vendor contracts as Dora deadline looms
Thousands of vendor contracts will need repapering to comply with EU’s new digital resilience rules
EU banks lose relief on model test after FRTB delay
Deferment of new trading book regime to January 2025 eats into transition period for “erratic” P&L attribution test
Sunday night football and the Basel III endgame
Big banks, political advocates and housing organisations are unlikely allies in race to dropkick new capital regime
Futures exchanges seek clarity on China licensing regime
Hazy details on landmark Futures and Derivatives Law breeds legal uncertainty, unnerving operators
Some EU banks wanted option to start FRTB on time
Representatives of member states raised possibility with European Commission at July meeting discussing the delay
For US Treasury troubles, treat the cause not the symptom
Regulatory alarm about hidden risk in the Treasury futures market misses the point, fund association execs write
Iosco delays pre-hedging consultation to November
Review into controversial practice splits industry