Liquidity stress testing remains a cornerstone of effective risk management and regulatory compliance for banks. However, a persistent challenge lies in interpreting what constitutes a “severe but plausible” stress scenario, particularly in the context of evolving depositor behaviours and increasing digitalisation of banking.

This paper aims to address this challenge by examining how stress scenarios can be robustly calibrated using empirical evidence backed by statistical methods, with particular focus on liquidity stress testing informing the Internal Liquidity Adequacy Assessment Process (ILAAP).

In this article, we outline the core expectations of an SEA, draw out common challenges, and describes how we can help you transform a regulatory obligation into a strategic opportunity. As the 1 October 2025 deadline approaches, banks must move swiftly to develop, review, and approve their SEA documents. Starting early is critical to allow for internal engagement, governance, and any required iterations of the document.

Arriving hot on the heels of our earlier article on what the 2025 Bank Capital Test Means for small- and medium-sized banks, the Prudential Regulation Authority (PRA) has quietly published an accompanying set of stress parameters. These include both rates-up (supply shock) and rates-down (demand shock) scenarios, and can serve as a useful benchmark for firms not participating in concurrent stress testing. They may be particularly helpful for use in internal stress testing exercises, including within the Internal Capital Adequacy Assessment Process (ICAAP).

With the Bank of England’s 2025 Bank Capital Stress Test now in motion, small and medium-sized banks should take note. While only the large banks participate directly, it is nonetheless of interest for other firms as they approach their next stress testing exercise. The latest publications bring stress parameters up to date from the 2024 Desk-based Stress Test, and some elements have changed. This article explores what banks can take away from the latest stress programme and how to reflect those developments in their own risk management processes.

On 27th June 2024, the Prudential Regulation Authority (“PRA”) published the ICAAP Scenarios for non-systemic UK banks, which are the supply shock scenario and the demand shock scenario. This article summarises the key factors of the scenarios and provides specific points on how small- and medium-sized banks should approach there stress testing design processes, with relation to the 2024 ICAAP Scenarios.

On April 23, 2024, the Prudential Regulation Authority (PRA) published the outcomes of a thematic review of banks' risk management practices related to private equity (PE) financing activities. This article summarises the key areas of improvement and provides specific action points that small- and medium-sized banks may consider as part of their risk management practices.

On the 15th May 2024, The Prudential Regulation Authority (“PRA”) published the outcomes of a thematic review it conducted on the recovery planning capabilities in a Dear CEO letter. This article summarises the key areas of Improvements and provides specific action points that small- and medium-sized banks may consider as part of the recovery planning process.

PRA in the supervisory statement SS2/24 outlines requirements around solvent exit planning and execution. This article summarises the requirements and provides specific action points that small- and medium-sized banks can consider to implement these requirements.

In this webinar, we will provide an overview of the key requirements banks must take account of with respect to their current or planned future relationships with deposit aggregators. Specifically, this will include: Prudential risk: liquidity risk management and liquidity stress testing implications; Liquidity regulatory reporting: implications for calculation and treatment of deposits; and, Depositor protection (Financial Services Compensation Scheme coverage), and third party and outsourcing risk.

This article outlines the primary risks to banks linked to the utilisation of Deposit Aggregators (DAs) and proposes mitigating measures as outlined in the Dear CFO letter issued by the Prudential Regulation Authority (PRA) on November 15, 2023 and the Dear CEO letter in April 2021.

PRA in the consultation paper CP10/23 outlines requirements around solvent exit planning and execution. This article summarises the requirements and provides specific action points that small- and medium-sized banks can consider to implement these requirements.