Analysts believe the upcoming AQR, to be carried out by consultancy Oliver Wyman on behalf of regulators, has become so important to lenders that it is affecting their whole business.
“The fall in lending this year is greater than we had previously forecast. This is partly the result of the impending AQR, which has prompted some balance sheet reduction,” Ernst and Young’s report said.
The group expects the economic recovery to kick in the coming year, with lending forecast to rise 3.2 per cent in 2014.
And it expects deposits to rise this year as well, as firms and consumers show increasing faith in the strength of lenders.
The report also forecasts a strong rise in business investment – it predicts a 3.8 per cent increase, reversing the falls seen in the past seven quarters.