Britain's seven biggest lenders have passed the second round of annual stress tests to establish their resilience to a sharp economic downturn. This test was based on an emerging-markets crisis, whereby a plunge in Chinese growth to 1.7% rattled the markets, sending oil below $40 a barrel and undermining developing countries and Europe.
Bank of England Governor Mark Carney said the banks were now far more resilient than in 2008-2009, and within sight of what the Bank's Financial Policy Committee (FPC) deems adequate capital buffers for the long term.
What the commentators said
While all seven "technically passed, only five really did, with two somewhat on the naughty step", said James Quinn in The Daily Telegraph. Barclays, HSBC, Lloyds, Nationwide and Santander were fine. RBS and Standard Chartered didn't meet their capital requirements under the stress scenario. But as the test was based on 2014 accounts, and since then both have raised more money in any case, they won't have to submit plans to top up funds.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Sorry, but the "imagined stress" in emerging markets hardly seems that severe, said Patrick Hosking in the same paper. Chinese growth of 1.7%? "Are recessions really so impossible in China?" More disconcerting, though, is the longer-term "climbdown on capital levels". After the crisis, regulators were talking about a buffer worth 18% of risk-weighted assets. Now the Bank says 11% will do.
It's certainly a "mighty leap downwards", agreed The Guardian's Nils Pratley. Perhaps it suggests that "today's central bankers just have complete faith in their ability to spot dangers"? We should certainly beware the Bank's new-found optimism that the sector has moved out of the "post-crisis period", said Osborne. That kind of talk "probably means the next one's a fortnight away".
-
Renewable investing: who is paying for the green revolution?Investors in renewables have not been rewarded, says Bruce Packard. Will they fund the government’s plans?
-
UK house prices rose 4.6% last year – where did property prices grow most?House prices increased by 4.6% in 2024, giving an average property price of £268,000. Where did property prices grow the most and will they continue to rise this year?
-
UK banking stocks: what’s the latest this results season, and are they worth a look?All five major UK banks released their annual results in February, reporting profit increases. But the sector has long been unloved by investors. Are UK banking stocks hidden gems, or better avoided?
-
Britain’s most-bought shares w/e 12 AugustNews A look at Britain’s most-bought shares as of 12 August, providing an insight into how investors are thinking and where opportunities may lie.
-
Activist investing: forget hedge funds, leave it to private investorsOpinion Demands from “activist investor” hedge funds are every bit as short-termist as the management teams they are trying to shake up, says Matthew Lynn. Private investors will take a long view.
-
Three laggards to buy for long-term growthOpinion Some of the best long-term capital-growth opportunities lie in companies that have struggled over the past few years, says professional investor Ben Ritchie. Here, he picks three of his favourites.
-
Standard Chartered swings the axe
News Standard Chartered has launched a major restructuring programme after reporting its first quarterly loss since the Asian crisis in the late 1990s
-
Should you buy RBS shares?Features The government is quietly selling its stake in RBS, the bank it bailed out at a cost of £45bn. Here, Matthew Partridge looks at whether the shares are worth buying.
-
RBS starts its return to the private sectorNews The government began to return Royal Bank of Scotland to the private sector this week, seven years after saving it from collapse.
-
Barclays gives its boss the bootFeatures Barclays has fired its CEO Antony Jenkins after three years on the job. He will be replaced by the chairman, John McFarlane, on an interim basis.
