(a) Domestic economic downturn — this estimates the impact on a bank's asset quality, impairment provisions, profitability and capital adequacy of adverse changes in selected macroeconomic variables (e.g. GDP growth, unemployment rate, interest rates, bankruptcy rates and asset prices etc.) that are relevant to the bank's exposures;

(b) Economic downturn in major economies affecting Bahrain (e.g. U.S., Saudi Arabia, UAE etc.) — this estimates the impact on a bank's counterparty exposures (e.g. corporate loans, holdings in securities, interbank exposures etc.) as a result of economic downturn in major economies that have significant financial/commercial/trading links with Bahrain;

(c) Decline in the real estate market — this estimates the impact of a decline in property prices on collateral coverage, default risk and provisioning needs for loans secured by properties;

(d) Decline in the value and market liquidity of financial collateral — this estimates the impact of a decline in the valuation and market liquidity of financial collateral, which reduces the quality and quantity of the collateral, leading to lower collateral coverage and recovery rates and higher provisioning needs and capital charges;

(e) Increases in non-performing loans ('NPL') and provisioning levels — this assesses the resilience of a bank's loan portfolios in terms of the impact of such increases on its profitability and capital adequacy. In designing the scenario, the bank may apply different percentages of increase in classified loans and provisioning levels to its loan portfolios;

(f) Rating migration of counterparties — a test based on the internal or external credit ratings of bank's credit exposures, by migrating a certain percentage of the credit exposures of a specific rating grade (by one or more notches) to a lower rating grade, and assessing the resultant impact on a bank's profitability and capital adequacy. The capital impact may include the effects of increases in credit losses and provisioning needs, as well as the application of higher risk-weights due to rating downgrades in the calculation of regulatory capital; and

(g) Default of major counterparties — this estimates the impact of default of a bank's major counterparties, including corporate, sovereign and bank counterparties, on its profitability, as well as liquidity and capital adequacy. The test can be extended to cover aggregate exposures to major industries, market sectors, countries and regions (e.g. by assuming that a significant number of defaults occur within such aggregate exposures).