This “cardiac stress test” gives an outlook for the patient’s health going forward. Its aim is to gauge the extent to which banks can withstand a deterioration in the economic setting. The bulk of the on-site inspections performed as part of the AQR have now been completed.
These inspections focused on scrutinising credit exposures and collateral valuations, looking both at individual exposures and aggregate portfolios. The resulting data were used to ascertain whether there was any need for valuation adjustments. Level 3 fair value exposures were also inspected.