KPMG reacts to BoE stress test 2021 announcement

KPMG reacts to BoE stress test 2021 announcement

Steven Hall, financial services partner at KPMG UK, reacts to BoE stress test 2021 announcement.

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Steven Hall, financial services partner at KPMG UK, said:

“The Bank of England has today announced the details of 2021’s Annual Cyclical Scenario stress testing exercise. With the aim being to test banks’ ability to absorb losses in a hypothetical severe economic scenario while continuing to support the economy, the details are broadly in line with expectations. However, concessions to smooth the path through a staggered submission timetable, with no ring-fenced bank submissions and no base-line projections, will relieve some of the pressure on banks.

“In a year when banks are already committed to a number of other stress tests, not least the ground-breaking climate stress test, these concessions will come as a welcome relief for some, though in many cases the staggered submission will likely duplicate efforts as banks gather data for both deadlines.  

“While the plan is to revert to ‘business as usual’ next year, the real cost of Covid-19 is likely to hit materially in the second half of 2021 as the effects of the furlough scheme ending are felt. As a result, we might see further amendments and changes in forthcoming exercises.”

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