How we helped Nationwide achieve great stress testing results

Nationwide is one of the UK's largest high street financial services brands. Because of its scale, Nationwide was required to take part in a stress testing regime set out by the Bank of England. At the time, this new framework was significantly different from previous experiences, with the timescales being much shorter and the results being made available to the public for the first time ever.

Nationwide wanted to ensure their results performed against these challenges. Their aim was to give the Prudential Regulation Authority (PRA) confidence in their overall stress testing outcomes, demonstrating the high-quality analysis they had performed to achieve such conclusions. So they asked Jaywing to help.

Jaywing was asked to support Nationwide’s internal stress testing team with a best practice approach. From that point on our analysts and consultants formed a key part of their team, leading a long-term project to help develop their stress testing method and models to be used to forecast credit risk losses under a variety of macro-economic scenarios.

Man with laptop explains something to another man

After introducing our new methodology, we performed two Bank of England stress tests and two Internal Capital Adequacy Assessment Processes (ICAAP). We then handed this new, and significantly improved process back to Nationwide’s internal team, confident that this would help them successfully manage future stress testing projects.

As a result of our involvement, Nationwide were able to complete their stress testing programme on time and to a high standard. This helped Nationwide execute a best practice standard to stress testing, all without impacting Nationwide’s day-to-day business.

“Jaywing’s ability to deliver on all aspects of the project meant we could be highly coordinated and more resource efficient than by using a collection of qualified individuals. Jaywing’s proposal offered a true partnership approach.”

Matthew Kent, Nationwide’s Head of Group Lending

“The stress testing approach opened us up to considerable public and market scrutiny; however we saw it as a further opportunity to demonstrate to the PRA that Nationwide’s foundations were sound and secure. Jaywing’s involvement brought high-quality analysis and timely delivery that supported our overall stress testing outcomes.”

Nathan Spry, Head of Credit Risk Financial Planning at Nationwide added: “Aside from the Jaywing team feeling like an extension of my own stress testing function, I was equally impressed with their appetite to explore and present a wide breadth of options as we progressed through the modelling challenges and builds. Bringing both industry experience and innovative thinking to bear as they supported our investment in forecasting capability provided me with confidence and trust in the eventual outcome.”