Stress test shows top 8 UK banks have enough capital: Bank of England

THE Bank of England (BOE) said on Wednesday (Jul 12) its annual stress test of eight major lenders showed that each could cope with rising interest rates in a stressed environment, and none would need to submit a revised capital plan.

The test checked if banks were holding enough capital to cope with theoretical shocks, under a scenario which the BOE said was more severe than the global financial crisis of 2008, when British taxpayers had to bail out several lenders. The test also measured how well the lenders would cope with a global rise in interest rates.

“The results of the 2022/23 annual cyclical scenario stress test show that the major UK banks are resilient to a severe stress scenario that incorporates persistently higher advanced economy inflation, increasing global interest rates, deep simultaneous recessions with materially higher unemployment in the UK and global economies, and sharp falls in asset prices,” the BOE said in a statement.

There was no common pass mark, but each bank had to scale a bespoke hurdle, with Barclays, Lloyds, HSBC, NatWest, Santander UK, Standard Chartered, Nationwide Building Society and Virgin Money all showing no capital inadequacies, the BOE said. REUTERS