All seven UK banks pass BoE stress tests
Investors took confidence from Carney's affirmation that banks would need to hold Tier 1 equity of 11% of risk-adjusted assets by 2019, which is less than the 13% that was already held in aggregate by the major banks in September.
While all banks passes the main stress test scenario of weathering a theoretical deterioration in global economic conditions, the Royal Bank of Scotland failed to meet its individual capital guidance requirements and Standard Chartered failed to reach its so-called Tier 1 minimum capital requirement of 6%. However, both lenders have strengthened sufficiently since to pass muster.
Capital was considered to be adequate at the other five lenders included in the tests: Barclays, HSBC, Nationwide Building Society, Lloyds and Santander UK.
Some bank analysts complained that the stress test assumptions for banks' trading books were not harsh enough as crude oil futures were already at the levels assumed in the tests.
Speaking after the release of the stress test results, Governor Carney said Britain's financial system was significantly more resilient than before the financial crisis, with banks' holdings of liquid assets now four times larger. ■