StanChart and RBS weakest in stress tests

ROYAL Bank of Scotland and Standard Chartered have officially been confirmed as the weakest of the UK’s seven largest lenders.

The two giants scraped through the Bank of England’s ‘stress tests’ designed to determine whether banks hold enough capital to withstand another financial crisis.

They were given the thumbs up only because they have already set in train new measures to bolster their finances.

The stress tests examined banks’ ability to cope with a series of financial shocks, honing in on a dramatic slowdown in China, a huge rise in fines and lawsuits and the oil price falling to $38 a barrel.

But shareholders in all the major banks breathed a collective sigh of relief as the Bank of England governor said the stress tests results confirmed that UK lenders are ‘within sight’ of having enough capital to protect themselves over the long term.

This means it is unlikely they will be forced to take more drastic measures such as selling businesses or tapping shareholders for emergency funds.

Shares in Barclays rose 4.6pc or 10.3p to 233.5, making it the biggest riser in the FTSE 100. Royal Bank of Scotland was up 9.8p to 312.2p, HSBC rose 9.5p to 539p, and Lloyds edged up 1.75p to 74.71p.

The stress tests were based on banks’ balance sheets at the end of last year. RBS and Standard Chartered fell just short of the capital requirements.

The Bank of England indicated that lenders could be forced to hold an extra £10bn in a new ‘counter cyclical buffer’ to protect against financial shocks.