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Fitch: UK Bank Stress Tests Show Better Capital But Risks Remain
December 17, 2014 / 4:22 PM / 3 years ago

Fitch: UK Bank Stress Tests Show Better Capital But Risks Remain

(The following statement was released by the rating agency) Link to Fitch Ratings' Report: UK Bank Stress Tests – Better Capitalisation but Vulnerabilities Remain here LONDON, December 17 (Fitch) The results of the UK bank stress tests were broadly in line with Fitch Ratings' expectations and highlight the resilience of the sector. But they reveal vulnerabilities in leverage and regarding risk-weight pro-cyclicality at some banks. Our Viability Ratings (VR) already reflect the fundamental strengths and weaknesses highlighted by the exercise, so we do not expect any rating actions. The projected losses were generally higher at banks undergoing greater restructuring. No significant additional measures to those already agreed with the regulators will be required for the sector, apart from a revised plan agreed for The Co-operative Bank, which has a 'b' VR. We have analysed the stress test results in our report, "UK Bank Stress Tests - Better Capitalisation but Vulnerabilities Remain", published today. The exercise highlights leverage as a weakness under stress for some banks, which is likely to spur the sector to improve it, particularly through issuance of high-trigger additional Tier 1 (AT1) instruments. The tests also highlight the pro-cyclicality of risk weights in some of the banks' internal models, which could be a structural risk. The full report is available to subscribers at www.fitchratings.com or by clicking on the link. Contact: Claudia Nelson Senior Director Financial Institutions +44 20 3530 1191 Fitch Ratings Limited 30 North Colonnade London E14 5GN Alan Adkins Senior Director Credit Policy +44 20 3530 1702 Cynthia Chan Senior Director Fitch Wire +44 20 3530 1655 Media Relations: Elaine Bailey, London, Tel: +44 203 530 1153, Email: elaine.bailey@fitchratings.com. The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings. ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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