Saturday, 3 December 2016

Why Major Banks Has Failed To Pass The 'Stress Test'?


Barclays and Standard Chartered struggled to pass the Bank Of England Stress Test.

That Royal Bank of Scotland failed the third such test was less of a surprise given the strife at an institution that is heading for nine years of losses and remains 73%-owned by the Government.

The Bank asked RBS to raise £2 billion, which it has agreed to.

The Prudential Regulation Authority, an arm of the Bank, didn’t ask either Barclays or Standard to raise fresh capital, saying they had taken steps to get over the line. While neither bank can be said to be in financial difficulty, that they had issues with the tests shows how vulnerable the sector remains to political turmoil, low interest rates and global instability.

The tests looked at how the UK’s seven biggest lenders would cope with a British and global recession, a plunge in house prices of 31%, and heavy fines from regulators. It envisaged losses to the banking system of £44 billion under scenarios five times worse than the 2008 crash.

HSBC, Lloyds Banking Group, Nationwide and Santander UK were all given a clean bill of health.



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