Work not infrequently creates stress, as those of us who toil for our daily bread should know. Human resources managers are certainly aware of that. The latest development is to show they care about the mental health of the employees under their charge. Health check-ups are beginning to include visits to psychologists, followed up with sessions with therapists where deemed necessary. Some executives may not take this approach too kindly. They are pacified with explanations that it is for their own good that companies realise the stress that may be caused to their human resources.

All that follows from knowledge that stress is not restricted to those with tough jobs to handle. It may come as a surprise to many, however, that stress is now being diagnosed in non-human factors as well. Banks are the leading example.

They came to the fore in the financial crisis of 2007-2009. That started, as it is too early to forget, in the US, where it turned out that the regulatory authorities had been somewhat less than authoritative in their policy-making and implementation.

They should know a bubble when they see one. Yet for years they acted as if blissfully unaware of the horrendous one being built up through sub-prime lending, made possible by their own lax monetary policy. America was not the only country to let bubbles develop. In various countries in the European Union a property bubble built up in open view, with everyone mistaking it for a sign of unbreakable and irreproachable prosperity. Malta was not immune to that particular bug.

But the big sound of bursting bubbles came in the US with the collapse of Lehman Brothers. That signalled sudden awareness of what had been obvious but irresponsibly ignored for years. It also led to three inter-related developments which changed the face of the financial world.

The first was a decision by the American authorities to let Lehman Brothers go to the dogs. Unthinkable though that was, the wobbling mammoth was allowed to fall to its knees and tumble over.

The second was a belated realisation that much of the banking system was, well, stressed – meaning that it suffered from capital inadequacy relative to its qualitative exposure. The third outcome was that private financial institutions, which had for long made dollops of private profit, now became social cases in urgent need of central intervention to save their bacon. Not all were saved, but many were kept afloat with public funds.

Financial commentators observe that the pivotal moment in the global financial crisis of 2007-2009 came when the US authorities conducted stress tests of banks’ resilience to further shocks, and recapitalised some of them. The tests ultimately satisfied investors that US banks were safe, and that the government would not let another major financial institution collapse, as it did with Lehman Brothers.

That was not the end of the stressful story. The bursting of the property bubble was the beginning of much turbulence in the European Union. Ireland took early action. Greece did not. The EU dithered for too long a time before putting together a rescue package for it, together with the IMF.

The tardiness led to a realisation that even EU sovereign debt – lending to governments – could be high risk. Greece was the worst case. But Portugal, another relatively small country, was not far behind. Spain – a big economy – was probably in worse shape. A second bigger aid package was bundled together, put at €440 billion and styled the European Financial Stability Facility.

Worries remained, especially from within the Spanish banking system. They did not go away because the leading tennis player in the world, Rafael Nadal, was Spanish, or because the Spanish national football team was joint favourite to win the World Cup.

EU regulators took a leaf out of the American financial book and agreed to conduct individual stress tests on 91 banks, representing 65 per cent of the region’s balance sheet, against an agreed set of criteria, including some sovereign risk, and to publish the results on July 23. The stress tests were particularly welcome to the Spanish government, eager to show that its bank system was now sound.

Financial observers say that the stress tests are not expected to uncover new horrors. That prediction certainly applies to our own Bank of Valletta, one of the 91 banks selected to be tested. In line with the arrangements set up by the EU authorities, the Malta Financial Services Authority and the Central Bank were both involved in the union’s Committee of European Banking Supervisors (CEBS) stress test exercise across EU member states. In a statement, the Central Bank said that last year the CEBS had already carried out an EU-wide stress test assessing the resilience of the major European banks.

The second stress testing is intended to assess possible shocks on credit and market risks, and the availability of further lending. The exercise has been broadened in each EU member state to cover those banks whose aggregate total assets represent at least 50 per cent of the assets of the banking sector as a whole. Hence the involvement of Bank of Valletta. In a nutshell the tests assess if capital reserves are adequate to withstand a severe downturn.

No such downturn is expected in Malta on current showing. In any event, the Bank of Valletta chairman has stated that the bank carries out its own analysis regularly and is well placed to navigate forward.