The macro stress tests
have a key role in identifying, preventing and dissolving the risk of banking and the whole financial system.
Deutsche Bank's stress test
included proceeds of around USD4bn from the sale of its stake in the Chinese bank, Hua Xia, which was delayed due to a regulatory delay.
Of the 51 banks subject to the EBA-led stress test
37 are directly supervised by ECB Banking Supervision, covering 70% of banking assets in the euro area.
The EBAs stress test
is no forecasting exercise; rather, it analyzes how banks capital positions may develop under different stress scenarios.
A key feature of ED TN-2 is that it is accompanied by four basic stress test
templates: one each for conducting credit, market and liquidity risk assessments as well as a scenario analysis template that combines credit and market risk stress tests
Indeed, going further, we can say, with confidence, that we know that the methodologies underpinning both financial models and regulatory stress tests
do not work: the stress tests
provide an extremely unreliable radar system.
And, if you're undergoing routine stress tests
year in and year out, that's rarely indicated.
These credit unions would be required to maintain a stress test
capital ratio of at least 5%, which is higher than the 4% minimum leverage ratio required of banks.
As well as SIFIs, the multiple insurers with savings and loans, by Dodd-Frank default under Fed supervision, might also be caught up in this stress test
scenario, the ACLI worries.
Although community banks will not be required to undergo the same types of stress tests
, the regulators did note that all banks, regardless of size, should be able to "analyze the potential impact of adverse outcomes in their financial conditions.
The government had asked the Vienna-based body to verify that the methodology of the stress tests
is consistent with global safety standards.
However, since the recession of 2008-2009, other companies have been performing stress tests
on their financial statements.