On 12 July 2023, the Bank of England (BoE) published the results of its 2022/23 stress test of the UK banking system.

Key indications from the results include the following:

• The major UK banks would be resilient to a severe stress scenario that incorporated persistently higher advanced-economy inflation, increasing global interest rates, deep and simultaneous recessions in the UK and global economies with materially higher unemployment, and sharp falls in asset prices.

• Due to resilience built up by banks in recent years, the UK banking system would be able to withstand the severe macroeconomic scenario and has the capacity to support households and businesses throughout the stress.
• In the stress scenario, all participating banks and building societies remain above their Common Equity Tier 1 (CET1) and Tier 1 leverage ratio hurdle rates on an IFRS 9 transitional basis in this test and no bank is required to strengthen its capital position as a result of the test.
• For the first time, the test assessed the ring-fenced subgroups (RFBs) of selected participating banks on a standalone basis, where these differ materially from the group. All four participating RFBs also remain above their CET1 and Tier 1 leverage ratio hurdle rates in the test.
• The results of the stress test support the FPC’s judgement that the UK banking system has the capacity to support households and businesses through a period of higher interest rates, even if economic and financial conditions were to be substantially worse than expected.