British banks will be able to withstand simultaneous recessions in the UK and global economies, a stress test by Bank of England has found.

All the seven British banks and building societies cleared the stress test. The test evaluated the performance of the financial institutions against a global financial crisis combined with plummeting asset prices.

Go deeper with GlobalData

Data Insights

The gold standard of business intelligence.

Find out more

In a statement, Bank of England said: “Despite facing loss rates consistent with the global financial crisis, the major UK banks’ aggregate CET1 capital ratio after the stress would still be twice its level before the crisis.

“All participating banks remain above their risk-weighted CET1 capital and Tier 1 leverage hurdle rates and would be able to continue to meet credit demand from the real economy, even in this very severe stress.”

Why stress test?

A stress test, usually conducted by the regulators, determines a bank’s resilience against market shocks. The exercise enables to identify the banks which have low capital buffers and vulnerable to failures during downturns.

Last month, European Banking Authority (EBA) conducted an EU-wide stress test on 48 banks.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

Though none of the lenders failed in the EU test, British banks Barclays and Lloyds were among the worst performers.

Bank of England test details:

In the test conducted by Bank of England, all banks ended with adequate capital buffers above the threshold level.

The test included all British banking majors including HSBC, Barclays, Lloyds, RBS, Santander UK and Standard Chartered.

The stress test found that the banks will face a collective loss of £170bn ($218bn) during crises, reported Reuters.

However, they will have enough buffers to maintain lending services.