Major UK Banks Pass Bank Of England's 2017 Stress Test

(RTTNews) - Bank of England on Tuesday announced the results of 2017 stress test of the UK banking system, noting that no bank needs to strengthen its capital position as a result of the stress test.

All seven of the UK's biggest lenders passed the Bank of England's 2017 stress test for the first time since the test was launched in 2014.

Meanwhile, Barclays and Royal Bank of Scotland have emerged as the weakest British lenders as they failed to clear the higher so-called 'systemic' hurdle set by the Bank.

In a statement, BoE said, "The 2017 stress test shows the UK banking system is resilient to deep simultaneous recessions in the UK and global economies, large falls in asset prices and a separate stress of misconduct costs."

The Bank noted that the economic scenario in the test is more severe than the global financial crisis. Significant improvements in asset quality since the crisis mean that the loss rate on banks' loans in the stress test is the same as in the financial crisis.

The stress test was administered to the UK's seven largest lenders, including Royal Bank of Scotland, HSBC, Barclays, Lloyds, Santander, Nationwide, and Standard Chartered.

In the test, banks incur losses of around 50 billion pounds in the first two years of the stress. This scale of loss, relative to their assets, would have wiped out the common equity capital base of the UK banking system ten years ago, the Bank noted.

The stress test shows these losses can now be absorbed within the buffers of capital banks have on top of their minimum requirements, it said.