BoE unveiled stress test results; expects banks to hold CCB of 1%

By FXStreet FXStreet (Mumbai) – The Bank of England (BoE) today released the results of annual ‘stress tests’. Five out of the seven banks tested were found to have no capital inadequacies. These five banks namely- HSBC, Barclays, Lloyds Banking Group, Santander and Nationwide are also not required to take any action. The BoE noted that the other two banks namely- Royal Bank of Scotland and Standard Chartered managed to pass the tests only because they had taken steps to improve their capital ratios mid-way in the process. Both these banks are not thus not required to submit new capital plan.

The central bank highlighted credit conditions in Britain have recovered from the financial crisis and now banks have begun to lend more freely. The BoE said the banking system has gotten over the phase that had followed the global financial crisis and was marked by “heightened risk aversion and retrenchment from risk-taking”. The central bank has however warned that asset prices continue to remain vulnerable to a big rise in interest rates as well as emerging market risks.

Counter-cyclical capital buffer

Banks from now on will be expected to hold a so-called counter-cyclical capital buffer (CCB) of 1pc during normal times. The BoE …read more

Source:: FX Street