RBS and Standard Chartered are weakest
Banks pass ‘stress tests’ in move to ‘normal’ banking
Banks are beginning to lend more but they will need to prop up their reserves by as much as £10 billion to avoid another shock to the system, said the Bank of England.
In its latest “stress tests” on the strength of the banks, it says the system is now moving into more normal conditions.
“Following the global financial crisis, there was a period of heightened risk aversion and retrenchment from risk-taking,” the Bank said. “The system has now moved out of that period.”
All the banks and one building society passed this year’s test although Royal Bank of Scotland and Standard Chartered only passed after taking steps to improve their capital ratios mid-way through the testing process.
The other five lenders – Barclays, HSBC, Lloyds Banking Group, Nationwide and Santander – did not require further action.
Commenting on the results, RBS’s chief financial officer Ewen Stevenson, said: “We are pleased with the progress we have made relative to the 2014 stress test, but recognise we still have much to do to restore RBS to be a strong and resilient bank for our customers.”
Lloyds group chief executive, António Horta-Osório said: “We are pleased to have comfortably exceeded the thresholds under this year’s PRA stress test. These strong results, which again reflect a material stress to the UK economy, demonstrate the progress we have made in de-risking our balance sheet as well as the Group’s strong capital position and capital-generative business model.”