The International Monetary Fund says lender forbearance may distort the risks U.K. banks could face in time of another crisis. “Stress tests for major banks reveal adequate levels of capitalization under severe macroeconomic scenarios,” says the IMF, “with the caveat that lender forbearance may, in some cases, have masked the extent of risks, given the high indebtedness of the household and commercial real estate sectors." Recently, the U.K.’s Financial Services Authority said banks engaged in lender forbearance—taking various actions to make it easier for borrowers to meet their obligations—to make their numbers look better.

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