RBS, Barclays and Standard Chartered Stumble in Stress Test

LONDON—Royal Bank of Scotland Group, Barclays and Standard Chartered all stumbled in a Bank of England stress test Wednesday, but only largely state-owned RBS must take fast action to bolster its capital.

RBS must add $2.5 billion in capital after failing the test.

The central bank said the U.K. banking system is strong enough to keep lending to homes and businesses even if the global economy were to become turbulent, in tests that measured how seven major lenders could cope with economic growth contracting to financial crisis levels, property prices plummeting and oil bottoming out at $20 a barrel.

The Bank of England said that RBS needed to thicken its capital cushion to withstand a severe economic shock. The 73%-government-owned bank will outline a new strategic plan early next year as it continues to face headwinds from low interest rates and potentially vast fines. On Wednesday the bank said that it would further cut costs and assets to meet regulatory standards. The Bank of England must still sign off on the plan.

Standard Chartered and Barclays also missed certain hurdles under the stress scenarios, but neither bank will need to change its capital plans.

The annual tests measure the resilience of seven lenders—Royal Bank of Scotland Group PLC, Lloyds Banking Group PLC, Barclays PLC, Standard Chartered PLC, HSBC Holdings PLC, Santander U.K. and Nationwide Building Society—in different scenarios that could erode their capital.

Write to Margot Patrick at [e-mail] and Max Colchester at [e-mail]

(END) Dow Jones Newswires

November 30, 2016 03:25 ET (08:25 GMT)

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