Risk Quantum/Nationwide Building Society
Big EU banks’ Level 3 assets up 25% in 2018
Hard-to-value assets rise €35 billion year-on-year
Legal charges topped £6 billion at UK banks in 2018
Majority of costs relate to legacy issues, including PPI and RMBS mis-selling
Escalating global threats make for harsher BoE stress test
World GDP assumed to contract 2.6% in 2019 scenario
Many EU banks’ sovereign portfolios highly concentrated
Forty-eight lenders have more than three-quarters of sovereign risk allocated to home country
UK bank misconduct charges dwindle
Six of seven stress-tested banks report 50% fall in legal and regulatory reserves
Barclays and Lloyds improve resilience to stress tests, HSBC falls back
Capital headroom above pass/fail thresholds increases to 250bp at lenders
IFRS 9 transition eases UK banks’ path through stress tests
Aggregate CET1 ratio 130bp lower without transitional relief