Europe News

UK bank stress tests: RBS and StanChart near-misses

The Bank of England
Alice Tidey | CNBC

Royal Bank of Scotland and Standard Chartered, the U.K.-based banks, scraped through the country's bank stress tests after taking steps to improve their capital ratios during the testing process.

The Bank of England - which ran the tests - said it planned to make banks hold as much as £10 billion ($15.1 billion) in extra capital as the credit cycle begins to normalize.

UK banker bashing on its way out as new rule dropped

The scenario which the banks were expected to be able to withstand as part of the test, included an emerging markets-led downturn, with China's gross domestic product declining to an annual rate of 1.7 percent, followed by a fresh euro zone crisis, deflation and recession.

HSBC and Standard Chartered, both of which are emerging markets-focused, would likely be worst hit initially under this scenario.

A logo sits above an automated teller machine (ATM) outside a Royal Bank of Scotland Group (RBS) bank branch in London, U.K.
Poll: Are you betting on a rebound in UK banks?

Last year, the Co-Operative Bank was the only U.K. bank to fail the tests, while state-backed Lloyds Banking Group and RBS came close to missing the capital levels set under the stress tests.

Ewen Stevenson, chief financial officer of RBS, said in a statement: "We are pleased with the progress we have made relative to the 2014 stress test, but recognize we still have much to do to restore RBS to be a strong and resilient bank for our customers."

The Bank of England also said on Tuesday that U.K. banks' capital requirements wouldn't continue to rise, signaling an end to the post-credit crisis era of increased caution.


Related Tags