RE: Stress Test2 Nov 2018 20:40
Lloyds Banking : EBA Stress Test Results
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11/02/2018 | 07:32 pm
2 November 2018
EBA STRESS TEST RESULTS PUBLISHED
Lloyds Banking Group plc (the 'Group'), together with 47 other financial institutions across Europe has been subject to the 2018 EU-wide stress test conducted by the European Banking Authority (the 'EBA'). The stress test does not contain a pass/fail threshold but is instead designed to be used as an input into the supervisory review process by assessing banks' ability to meet applicable capital requirements under stressed conditions.
The EBA stress tests assume a severe UK economic scenario combining significant falls in property prices and GDP, rising unemployment and deflation. In particular, house prices and CRE values drop by 29.3 per cent and 29.5 per cent respectively, GDP falls by 5 per cent by 2019, unemployment increases by 4.5 per cent, whilst equities suffer a 27 per cent fall in 2018. The scenario is also characterised by deflation, with bank rate rising to 1 per cent and sterling remaining flat.