Big Seven lenders pass Bank of England stress test


All seven of the UK's largest lenders have passed the Bank of England's stress test.

The results of the banking sector's annual health check showed it has enough capital "to support the real economy in a severe global stress scenario", such as a major slump in the Chinese economy or a financial market crisis.

The Prudential Regulation Authority (PRA) said Barclays, HSBC, Lloyds Banking Group, Nationwide Building Society and Santander UK did not show capital inadequacies.

The Royal Bank of Scotland Group did not meet its individual capital guidance and Standard Chartered did not meet one of the minimum capital requirements; however, the PRA ruled they did not have to submit new plans.

Taxpayer-owned RBS missed fulfilling one of the capital guidance criteria after "management actions" in the test.

However the PRA board was reassured by steps the bank had taken to strengthen its capital position for extra security in Tier 1, its central reserves, in future.

Standard Chartered did not meet the minimum capital of 6% in Tier 1 after management actions in the scenario.

The PRA viewed the bank's recent strategy review and steps it had taken to shore up its capital position were sufficient to pass the test.

The minimum overall capital level under stress conditions set by testers is 4.5%.

Standard Chartered was reportedly facing tougher scrutiny because of its exposure to emerging markets.

The Bank of England modelled a fall in Chinese economic growth from 7% to 1%, leading to a crisis in housing markets in China and Hong Kong.