Bank of England’s stress tests have ’fatal flaws’

The Bank of England's stress tests, which assess the financial resilience of UK banks, are described as 'worse than useless' in a new report by a Durham University academic. The report suggests that the UK banking system is still in poor financial shape and that the Bank of England's stress tests merely disguise that reality. The report, released by the Adam Smith Institute at a time when Europe faces a renewed banking crisis, challenges the Bank of England's claim that major UK banks could withstand another big shock. Begging for bailouts Author Kevin Dowd , professor of finance and economics at Durham University Business School , said: "The purpose of the stress testing programme should be to highlight the vulnerability of our banking system and the need to rebuild it. Instead, it has achieved the exact opposite, portraying a weak banking system as strong. This is like having a ship radar system that cannot detect an iceberg in plain view. "As the EU banking system goes into a renewed crisis, the UK banking system is in no fit state to withstand the storm.