Stress testing non-systemic banks and building societies

ICAAP scenarios for non-SDDTs 

The PRA published two ‘ICAAP scenarios’ on 14 July 2026 for use by non-SDDTs. These ICAAP scenarios are calibrated using the same framework for shocks as the Bank Capital Stress Test (BCST) for the major UK banks. The ICAAP and BCST scenarios are severe but plausible, vary with the state of the financial cycle and are typically countercyclical by design. Banks and building societies that have opted into the SDDT capital regime should use the SDDT scenarios.  

These ICAAP scenarios serve as a template and severity benchmark for non-SDDTs to support their own internal capital adequacy assessment process (ICAAP) stress testing scenario design processes and can be found below: 

ICAAP scenario variable paths

See How our scenarios should be used section for more information.

SDDT scenarios for SDDTs

The PRA published two ‘SDDT scenarios’ on 14 July 2026 for use by SDDTs.  

These published SDDT scenarios should only be used for stress testing in ICAAPs prepared in line with the SDDT capital regime. This includes completing your ICAAP in line with the expectations in SS4/25¹ and assessing your Single Capital Buffer (SCB) in line with PS4/26². For ICAAPs, under the existing regime, signed off before 01 January 2027, all firms should use the ICAAP scenarios as a template and severity benchmark. 

While these SDDT scenarios are calibrated using the same framework for shocks as the Bank Capital Stress Test (BCST) for the major UK banks and the ICAAP scenarios, the shocks in the SDDT scenarios have been designed to target a relatively constant buffer through the cycle. The aim is to ensure that as the UK moves through economic and financial cycles, the SCB calculated for an SDDT would remain at a relatively constant level if the SDDT’s risk profile and balance sheet remained broadly unchanged. In contrast, the BCST and ICAAP scenarios vary with the state of the financial cycle and are typically countercyclical by design. 

These SDDT scenarios serve as a template and severity benchmark for SDDTs to support their own ICAAP stress testing scenario design processes and can be found below: 

SDDT scenario variable paths

See How our scenarios should be used section for more information.

How our scenarios should be used

The stresses applied under the scenarios are not a forecast of macroeconomic and financial conditions in the UK, or a set of events that are expected, or likely, to materialise. Rather, as per previous scenarios, they are coherent ‘tail risk’ scenarios designed to be severe and broad enough to assess the resilience of UK banks to a range of adverse shocks. 

The results of stress tests are an important consideration for the PRA, used to inform the setting of banks’ and building societies regulatory capital buffers. 

Firms should consider the stress test scenarios in the context of their business and its own specific risk drivers. Our scenarios should be used as a starting point for firms to build and accurately calibrate their own scenarios under Pillar 2. We recognise that any single scenario, designed for firms with very different business models and risks, has its limits. We expect firms to choose scenarios that provide a strong challenge for their business.  

By publishing two differing scenarios, our aim is to encourage firms to consider the type, characteristics and severity of stress that their business model is vulnerable to, when designing their own stress testing scenario (or scenarios). Firms are ultimately responsible for developing their own scenarios to test their firm’s resilience. 

Guidance on the role of stress testing within the framework for setting banks’ and building societies’ capital requirements can be found in SS31/15 – The Internal Capital Adequacy Assessment Process (ICAAP) and the Supervisory Review and Evaluation Process (SREP).  

From 1 January 2027, guidance for firms who have opted into the SDDT capital regime on the role of stress testing within the framework for setting banks’ and building societies’ capital requirements can be found in SS4/25 - The Internal Capital Adequacy Assessment Process (ICAAP) and the Supervisory Review and Evaluation Process (SREP) for Small Domestic Deposit Takers (SDDTs). 

Supplementary stress testing guidance

Ahead of the SDDT capital regime effective from 01 January 2027 we are sharing additional guidance to support SDDT firms in understanding differences between SDDT scenarios and the ICAAP scenarios. 

In the December 2025 Financial Stability Report (FSR)³ the Bank set out a number of changes relative to previous concurrent stress tests. These included an updated approach to stress-test calibration and PRA buffer setting. 

Supplementary stress testing guidance on both of these areas can be found below: 

Supplementary stress testing guidance

Footnotes

¹ SS4/25 - The Internal Capital Adequacy Assessment Process (ICAAP) and the Supervisory Review and Evaluation Process (SREP) for Small Domestic Deposit Takers (SDDTs)

² PS4/26 – The Strong and Simple Framework: The simplified capital regime for Small Domestic Deposit Takers (SDDTs) – final

³ Financial Stability Report - December 2025