UK bank ECL scenarios may lowball coronavirus impact

The stress scenarios that UK banks currently have in place to ballpark their expected credit losses (ECLs) may underestimate coronavirus-related impacts, although regulatory intervention should spare them from dramatically increasing loan-loss reserves as the economic effects of the crisis manifest.

Lenders use a series of forward-looking simulations to size ECLs under IFRS 9 accounting standards. These are unique to each bank, meaning the number of, and economic assumptions included in, these

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