Bank officials in 2006 said stress tests were not stressful enough

Senior AIB officials expressed concerns in 2006 that Central Bank stress tests were "not stressful enough" — two years before the collapse of the Irish banking system.

The revelation came as the former head of the ESRI, John Fitzgerald, appeared before the Oireachtas banking inquiry.

The officials, who Mr Fitzgerald believed had the backing of senior members of AIB, perhaps even from the board, turned to the ESRI for help in better assessing the bank’s risks.

Specifically, the officials wanted the ESRI to develop macro-economic scenarios which the bank could then use in stress tests to evaluate whether a bank has enough capital to withstand adverse situations.

Mr Fitzgerald said he was unsure how the concerns expressed by AIB officials did not translate into actions which could have averted the crash in the subsequent two years, adding that he is looking forward to seeing the inquiry answer the question.

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