The Treasury Financial Stability Plan will subject banks to a "comprehensive stress test", allowing regulatory agencies to assess banks' ability to support lending and capacity to absorb losses under a severe economic outlook. This document provides our point of view and a framework for response.
The banking agencies have lifted much of the uncertainty clouding banks over the past year. The results have instilled greater confidence that banks would be able to continue their lending activities while weathering a severe economic recession, and the associated disclosures have addressed concerns for increased transparency in the banking industry by consistently applying criteria across firms. This document summarizes PwC perspectives on the stress testing results, including the implications of these changes going forward. Key messages include: