FSA mulls more data on bank bail-outs
The Financial Services Authority is considering whether to publish details of how UK banks were "stress-tested", which would reveal the Government's view of the "worst-case scenario" for the financial sector.
The regulator is under growing pressure to disclose which UK banks were given a clean bill of health in the tests, which were conducted earlier this year to determine how well they could withstand certain negative economic conditions.
It refused to give any details to Bloomberg, the news agency, when it submitted a Freedom of Information request asking how UK banks had fared. However, officials are now believed to be in negotiations over releasing the tests' criteria without compromising commercial sensitivities. It is understood that the Treasury is reluctant to publish exact figures showing the degree to which individual banks passed or failed.
The tests were designed to see how much extra capital each bank needed and the amount of assets they ought to put into the Government's "asset protection" insurance scheme.
The results for UK banks have not been released despite the admission from the US government two weeks ago that similar tests showed 10 lenders needed to boost their reserves by a total of $74.6bn (£47bn). Barclays is the only bank to have been open about its test results. It is thought to have been asked questions such as what would happen if there was a 50pc fall in house prices or a recession lasting more than two years.
Sources close to one major UK bank subjected to stress testing suggested that the decision to withhold the information was "political rather than financial".
"The Treasury wasn't keen because the banks were tested according to the worst-case scenario," the source said. "Publishing the criteria shows how bad the Government thinks it is possible for the financial crisis to get."
Analysts last night said that failing to release the results would only make the market nervous about what the banks were hiding. "Keeping the information under wraps will only serve to create more uncertainty," said Vince Cable, the Liberal Democrats' treasury spokesman.
The UK has already pumped £1.4 trillion into strengthening the banking system through investments, asset insurance and underwriting loans.
"The transparency of companies over the last few months has significantly improved so it is ironic that the one body not joining in the transparency is the regulator itself," said Ian Gordon, an analyst at BNP Paribas.
Hans Hoogervorst, chairman of Dutch regulator AFM, also criticised the failure of European authorities to reveal the results of stress tests.
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