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RBS stress test failure

by LLB Reporter
30th Nov 16 10:23 am

What happens now for RBS?

RBS has missed key hurdles in a Bank of England stress test, this mean the company will have to come up with new plans in case of a financial crisis.

The toughest stress test yet set out to measure the UK’s biggest lenders against a global economic crash.

RBS came out the worst and was forced to devise a new capital plan, which has been accepted.

The bank has said it had “agreed a revised capital plan… to improve its stress resilience”.

RBS submitted a new plan to the Bank of England after it ran its own tests and found its balance sheet would fall short.

The stress test which occurs yearly gauges the financial strength and resilience of the UK’s seven major leaders, Lloyds Banking Group, HSBC, Barclays, Royal Bank of Scotland (RBS), Santander, Standard Chartered and Nationwide Building Society.

Every bank was tested against a doomsday scenario which would see any economic growth plunge to levels seen during the financial crisis in 2008.

Under the five- year scenario, UK house prices would see a massive drop by 31 per cent and unemployment would rise to 9.5 per cent. Meanwhile China would suffer a recession and oil prices would plunge to $20 a barrel.

This is the third year of the annual stress tests for UK banks.

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