British banks have shown the worst results in recent banking stress tests in Europe. German and Italian banks are also hard to come by. The Supervisor of Banks in Europe has developed a test scenario with a severe economic recession of the European Union, which continues until 2020.
The Supervisor of Banks in Europe carried out the stress test in January-October and examined the 48 largest banks in Europe. Latvian banks were not among them. The scenario predicted a severe recession – with a drop of more than 8%, with Brexit becoming one of the driving forces, or a retreat of the UK from the EU.
In general, it is estimated that the pressure of banks has improved since 2008, but most European banks are the worst for the British people –
Lloyd & Co., Berkeley Banks and the Royal Bank of Scotland. The banking stress scenario also predicted the worst situation in Britain's economy. However, the German "Deutche Bank" and some regional banks will suffer heavily – for example, in the worst case scenario regulators will stop dividend payments instead of increasing the adequacy of equity.
Some banking experts noted – surprisingly, the Italian banks showed relatively good results. But it is explained that the tests did not include the latest situation in the Italian economy.
None of the banks has undergone stress tests. The previous stress test was carried out two years ago, and now it seems that banks have become more resilient to macroeconomic shocks.
The results of these tests will help the banker decide whether to require banks to increase their capital adequacy to protect themselves from potential losses.