WASHINGTON (Reuters) - The Federal Reserve Board said on Monday it had promoted an expert on bank stress tests to lead its financial stability division, as it works on changes to the annual exams of large institutions' financial health.


Andreas Lehnert, currently the division's deputy director, helped develop and run the Fed's first stress tests to see how banks could withstand massive financial upheaval. In his near-decade long career at the Fed he also worked in the division of research and statistics and served as chief of the household and real estate finance section during the 2007-09 financial crisis.


Lehnert will replace current director Nellie Liang, who is retiring, on Dec. 25. The move comes after the Fed expanded the division in May to strengthen the central bank's response to financial risks.


Alongside probing for financial vulnerabilities, Lehnert will be responsible for developing policies to address those risks.


Fed Chair Janet Yellen recently announced the central bank was looking into taking a more risk-sensitive, firm-specific approach in its stress tests, which will likely generate higher capital requirements for the eight largest U.S. banks.


On Monday she said in a statement that Lehnert had been a leader in "thinking about how to identify and reduce threats to the stability of our financial system."

Lehnert holds a PhD in economics from the University of Chicago and a master's degree from the London School of Economics.

(Reporting by Lisa Lambert; Editing by Andrew Hay)