The Bank of England (BoE) has published a report setting out the results of the 2015 UK banking system stress test (the Report).
- presents and explains the results of the exercise;
- sets out the judgements and actions taken by the PRA Board and the Financial Policy Committee that were informed by the stress-test results and analysis; and
- sets out, in the Annexes, the individual bank results and supervisory stance with respect to those banks have been formally approved by the PRA Board.
Among other things the Report notes that:
- no macroprudential actions on bank capital were required in response to the 2015 stress test;
- the stress-test results suggest that the banking system is capitalised to support the real economy in a severe global stress scenario, which adversely affects the UK;
- the capitalisation of the system has improved further over the course of 2015;
- this stress test did not reveal capital inadequacies for five out of the seven participating banks, based on their balance sheets at end-2014 (Barclays, HSBC, Lloyds Banking Group, Nationwide Building Society and Santander UK);
- the Royal Bank of Scotland Group did not meet its individual capital guidance after management actions in this scenario. In light of the steps that The Royal Bank of Scotland Group has already taken to strengthen its capital position, coupled with its plans for future additional Tier 1 (AT1) issuance, the PRA Board did not require The Royal Bank of Scotland Group to submit a revised capital plan; and
- Standard Chartered did not meet its Tier 1 minimum capital requirement of 6% after management actions in this scenario. In light of Standard Chartered’s recent strategy review and the associated steps taken to strengthen its capital position, the PRA Board did not require Standard Chartered to submit a revised capital plan.
In 2016, the European Banking Authority intends to run a stress test, and the BoE will run the cyclical scenario only. The BoE will publish the quantitative data associated with the 2016 scenario on its website, along with an explanatory ‘Key elements’ document around the end of Q1 2016. The BoE intends to publish the results of the 2016 exercise in Q4 2016. In 2017, the BoE intends to run both the cyclical and exploratory scenarios together for the first time. In 2018, the BoE intends to run the cyclical scenario only.
View Stress testing the UK banking system: 2015 results, 1 December 2015