Just when you thought it was time for us all to cheer up and enjoy the sunshine, along comes a ‘stress test’ by the Financial Services Authority.
The FSA has revealed that it has been ‘stress testing’ banks and building societies, to see if they could cope with the recession carrying on for at least another 18 months.
The ‘stress test’ also assumes a 6% shrinking of the economy from peak to trough, with growth not returning until 2011, unemployment rising to 3.7m people and house prices falling 50% from peak to trough.
It also assumes a 60% fall in commercial property values.
The FSA implies that all banks and building societies passed the stress test, with their capital reserves not falling below 4% of assets.
The FSA’s stress test, which follows a similar exercise in the US, will not result in publishing detailed information.
Could lenders survive if recession gets deeper?
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Comments
And yes this article is good news, however it is not being presented in that way and that is the issue.
Welll said LC. In fact the state of the economy owes a lot to 2 years of doom and gloom panic inducing reporting. One day they will see that this kind of media is not in the publics best interest. That is if they ever stop trying to blame everyone else
LC, so you would rather the reality check from the FSA was just 'brushed under the carpet'? What this survey seems to indicate is that the UK lenders are now 'bomb proof' if the worst case scenario occurs - that should be seen as good news and not be criticised.
OK so is this not worst case scenario the FSA are carrying out? It doesnt mean they are saying this IS going to happen...right? Why is this even being published??? You really need to cheer up introducer today and realise you market is brokers who do not need doom and gloom constantly.