On 20 March 2020, the Bank of England (BoE)  issued a statement that follows its earlier announcement on 11 March 2020.

Key points in the statement include:

  • the BoE is cancelling its 2020 annual stress test – the annual cyclical scenario. The decision to cancel the 2020 stress test for the eight major UK banks and building societies is intended to help lenders focus on meeting the needs of UK households and businesses via the continuing provision of credit;
  • the BoE had been due to publish the results of the 2019 biennial exploratory scenario (BES) on liquidity in mid-2020. In order to alleviate burdens on core treasury staff at banks, the BoE has paused this exercise until further notice;
  • the BoE published a discussion paper on the 2021 BES on the financial risks from climate change on 18 December 2019. The BoE will take stock of the responses as well as the evolving situation with a view to announcing the way forward for this exercise in the summer;
  • the PRA reminds firms that forward-looking information used to incorporate the impact of COVID-19 on borrowers into the expected credit loss (ECL) estimate needs to be both reasonable and supportable for the purposes of IFRS9. In the event firms believe such forecasts can be made, the PRA expects firms to reflect the temporary nature of the shock, and fully take into account the significant economic support measures already announced by global fiscal and monetary authorities. In particular, any such forecasts should take into account the relief measures – such as repayment holidays – that will be made available to enable borrowers who are affected by the COVID-19 outbreak to resume regular payments;
  • the planned survey into open-ended funds has been delayed until further notice, with a subsequent impact on the FCA consultation that would have followed; and
  • BoE and PRA supervisors will review their work plans so that non-critical data requests, on-site visits and deadlines can be postponed, where appropriate. This includes pausing the skilled persons Section 166 reviews relating to the reliability of banks’ regulatory returns that were announced in October 2019.