A prolonged recession could squeeze banks

Analysis - Stress test - 1st half 2020

Authors Korsgaard, Søren; Roulund, Rasmus Pank
Subject Financial stability; Stress tests reports
Type Analysis
Year 2020
Published 27 May 2020
A stress test of the banking sector shows that most banks should have sufficient capital to weather a steep, but temporary economic downturn. The banks are better capitalized than before the financial crisis and can withstand greater losses than those incurred during the financial crisis. If the downturn turns into a longer lasting recession, more banks are at risk of breaching their capital requirements.