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RBS fails Bank of England's stress test RBS fails Bank of England's stress test
(35 minutes later)
The Royal Bank of Scotland has failed key hurdles in a Bank of England stresst test, forcing the lender to draw up new plans in case of a financial crisis. The Royal Bank of Scotland (RBS) has failed key hurdles in a Bank of England stress test, forcing the lender to draw up new plans in case of a financial crisis.
The toughest stress test yet measured the UK’s seven biggest lenders against a global economic crash. The toughest stress test yet assessed how the UK’s seven biggest lenders would cope with hypothetical scenarios including a recession, a housing crash and a halving of the oil price.
Barclays and Standard Chartered also struggled under the test, which incorporated a synchronised UK and global recession, as well as potential misconduct costs. RBS, which is still 73 per cent owned by the government after its balouit in 2008 has emerged as the biggest failure in the annual health check of the banking system. This means the lender must take action to protect itself against a sharp slump in the economy.
RBS has issued a plan over nigh intended to bolster its financial strength by an estimated £2bn, which has been accepted by the BoE.
The bank has also reduced its "risky" assets by £10.4bn or 21 per cebt, to £38.6bn.
Ewen Stevenson, RBS chief financial officer, said the bank is committed to creating a “stronger, simpler and safer” bank for their customers and their shareholders.
He said: We have taken further important steps in 2016 to enhance our capital strength, but we recognise that we have more to do to restore the bank's stress resilience including resolving outstanding legacy issues.“
Barclays and Standard Chartered also struggled under the test, however neither was required to submit a revised capital plan.
The Bank's Financial Policy Committee said in light of the findings and action taken by RBS, “the banking system is in aggregate capitalised to support the real economy in a severe, broad and synchronised stress scenario”.
The test also covered HSBC, Lloyds Banking Group, Santanderand Nationwide.
As the BoE announced the results of its third annual stress tests it warned of a “challenging period of uncertainty around the domestic and global economic outlook”.
 
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