The Bank of England will launch stress tests on the UK's seven largest banks and architectural societies to study resilience to serious market shocks.
The central bank says the tests include how lenders can withstand “a deep simultaneous recession in the UK and the global economy, a massive decline in asset prices, rising global interest rates, and stress-level fraud costs.” 
One scenario involves a 28% drop in UK home prices.
Barclays, HSBC, Lloyds Banking Group, Nationwide, Natwest Group, Santander UK, and Standard Chartered will participate in this study. These institutions account for 75% of UK real economy loans.
The programme's objective is to “enhance financial stability and promote the safety and soundness of UK banks.”
“In doing so, banks aim to have the ability for banks to absorb rather than amplify their shocks and continue to serve UK families and businesses.”
This analysis is conducted every two years, replacing the annual circular scenario, and is conducted every 12 months and overseen by the Monetary Policy Committee and the Prudential Regulation Committee.
Here are the financial catastrophes that are part of the test:
UK home prices will drop by 5% in the early part of the scenario and 2% in the UK's GDP and global unemployment rates. The UK's unemployment rate is nearly doubled to the peak rate of 8.5% at the third year of the scenario's third year. When inflation returns to target, it increases to an 8% peak in the scenario, then lowers in the scenario
“We've been working hard to get the most out of our business,” said Rahul Choudhary, Broadstone Risk Director.
“In this context, many stress tests such as sudden drops in global or UK GDP, rapid rise in oil and gas prices, and real estate crash drops seem to be more relevant suddenly.
“The banks have committed to holding stress tests every other year that should provide security on the resilience and capital strength of the UK banking sector.”
The results will be made public in the fourth quarter of the year, the bank said, “it will be used to notify you of the establishment of capital buffers for the UK banking system and individual participating banks and to inform you of a broader understanding of the risks of the banking system.”
