Banks See Stress Tests As ‘Beauty Contests,’ EU Warns

Law360, London (November 27, 2019, 12:08 PM GMT) -- Europe’s lenders could be skewing the data they submit to their national watchdogs after regulatory stress tests because many companies see the exercise as a “beauty contest,” the bloc's banking regulator said Wednesday.

Financial services businesses could be rigging the data that regulators publish after the European Union's biennial tests of resilience in the industry, the European Banking Authority warned. The watchdog fears that banks are reporting that they hold more capital than they actually do to make themselves appear profitable to customers, regulators and rivals.

“The EU-wide stress test is still perceived by many banks as a beauty contest rather...

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