Hong Kong Banks’ Stress Tests Assume $89 Billion Outflow

Hong Kong ordered banks to conduct stress tests assuming customer withdrawals of as much as $89 billion over the next year, adding to signs of concern that lenders’ balance sheets have grown too fast.

Banks should assume that half of the HK$1.38 trillion ($177 billion) of customer deposits in local and foreign currencies added since late 2008 will flow out in six to 12 months, the Hong Kong Monetary Authority said in an e-mailed reply to written questions from Bloomberg News yesterday.