UK banks will pass EU ‘stress test’, FSA claims

25 June 2010

The Financial Services Authority (FSA) has ‘total confidence’ in the ability of UK banks to pass new stress tests imposed within the eurozone.

According to reports, leaders of the governments within the European Union agreed to carry out the tests and then publish the results in order to diffuse perceived investor concerns over the amount of exposure to risk many leading banks currently have within the territory.

Adair Turner, chairman of the FSA, was quoted by the Wall Street Journal as saying: “In relation to the UK banks ... we are not all concerned by what will be revealed by that."

"That reflects the fact that we have had in place from the beginning of last year a very stretching stress testing exercise.”

Mr Turner explained that previous domestic tests carried out within the UK would have much been stricter than those undertaken by EU regulators.

Stress tests are implemented to demonstrate the stability of a bank and its ability to withstand economic volatility.

Meanwhile, the new coalition government in the UK has announced that the FSA is to be broken up and its regulatory powers handed over to the Bank of England.

By Jim Ottewill

Become a bobsguide member to access the following

1. Unrestricted access to bobsguide
2. Send a proposal request
3. Insights delivered daily to your inbox
4. Career development