IMF favours bank stress tests for Gulf banks

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Gulf states should carry out regular stress testing of banks’ asset quality as part of assessing the stability of the financial sector, the IMF says.

Governments should periodically review assets to gauge any holes in bank balance sheets rather than pre-emptively pumping emergency funding into the banking system, as the UAE and Qatar did during the global financial crisis, said a report from the Washington-based fund.

“GCC countries should conduct periodic reviews of banks’ asset quality, in addition to stress testing, to determine whether the level of capital support is sufficient,” said the report by the IMF’s Middle East and Central Asia department.