On 7-May-2020, the UK Financial Policy Committee published the results of a desktop stress test. The test was conducted to assess the potential impact of the COVID-19 crisis on the performance of the major UK banks and building societies. The results were based on a set of assumptions and scenarios published in the Monetary Policy Report.
The stress test results indicate that the UK’s core banking system is adequately fortified to withstand the stress caused by the COVID-19 pandemic, and the UK banks are well-capitalized to provide continuous credit support to the economy. The aggregate CET1 ratio for the UK banks is projected to drop 380bps, from 14.8% at end-FY19 to 11% by the second year of the test scenario, but it would remain comfortably above the minimum regulatory requirement.