A January Bank of England (BoE) review into 20 fast-growing emerging banks has shown the smaller lenders are "overly optimistic" about the impact market stress could have on their operations. Melanie Beaman, a BoE director, noted this group of lenders had concentrations in higher-risk segments of the loan market which could leave them vulnerable during a downturn. Beaman also noted how many of the reviewed institutions had ambitious growth plans, expecting revenue from new operations to offset the impact of any impairment charges. Such growth may not be possible in stressed markets, she added.
A year-long Bank of England (BoE) review into 20 fast-growing emerging banks has shown the smaller lenders are "overly optimistic" about the impact market stress could have on their operations. Melanie Beaman, a BoE director, noted this group of lenders had concentrations in higher-risk segments of the loan market which could leave them vulnerable during a downturn. Beaman also noted how many of the reviewed institutions had ambitious growth plans, expecting revenue from new operations to offset the impact of any impairment charges. Such growth may not be possible in stressed markets, she added.