Bank of England to Deepen 2024 Stress Test for UK Banks and Asset Managers against Geopolitical Shock

The Bank of England (BOE) is planning to conduct a more rigorous stress test in 2024, subjecting the UK's largest banks and asset managers to a hypothetical shock worse than the previous year's gilt market spiral. This test aims to assess their ability to withstand a significant geopolitical shock and subsequent market stress. The move follows the UK gilt crisis in 2022, which saw the market react negatively to then Prime Minister Liz Truss's fiscal policies, prompting BOE intervention. Additionally, a new UK fraud law is expected to increase pressure on financial institutions' third-party due diligence.