Banks pass stress test
Britain’s seven biggest lenders have passed the second round of annual stress tests – but how resilient are the tests?

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".
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.

Andrew is the editor of MoneyWeek magazine. He grew up in Vienna and studied at the University of St Andrews, where he gained a first-class MA in geography & international relations.
After graduating he began to contribute to the foreign page of The Week and soon afterwards joined MoneyWeek at its inception in October 2000. He helped Merryn Somerset Webb establish it as Britain’s best-selling financial magazine, contributing to every section of the publication and specialising in macroeconomics and stockmarkets, before going part-time.
His freelance projects have included a 2009 relaunch of The Pharma Letter, where he covered corporate news and political developments in the German pharmaceuticals market for two years, and a multiyear stint as deputy editor of the Barclays account at Redwood, a marketing agency.
Andrew has been editing MoneyWeek since 2018, and continues to specialise in investment and news in German-speaking countries owing to his fluent command of the language.
-
Could DeepSeek boost China tech stocks?
DeepSeek appears to have been and gone as far as the stock market’s reaction is concerned, but Chinese tech companies are eagerly embracing advances in AI
-
How to avoid the 14 year inheritance tax gifting trap
Inheritance tax rules are getting tighter and more families are trying to find ways to avoid a hefty bill. Giving money away is a common strategy – but if done wrong your loved ones could be on the hook with HMRC for almost a decade and a half.
-
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 August
News 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.
-
S4 Capital – a company that still has much to prove
Tips Audit delays set shares tumbling at advertising agency S4 Capital. It needs to show it can turn growth into profits, says Bruce Packard.
-
When to buy shares in NatWest, Britain's worst bank
Tips Rising interest rates should lift profits for the banking sector if inflation doesn’t get out of control, says Bruce Packard.
-
How UK banks went from Big Bang to universal failure
Cover Story The 1986 deregulation shook up the banks, but the all-in-one model that it created is bad for customers and investors. Specialists do a better job – as the real fintech winners are showing, says Bruce Packard
-
Activist investing: forget hedge funds, leave it to private investors
Opinion 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.
-
Evergrande: Chinese property giant spooks global markets
News Global markets fell this week as investors worried about the fate of Evergrande, China’s most indebted property developer, which is teetering on the brink of default.
-
HSBC’s profits surge – but will the share price?
News Pre-tax profits at banking giant HSBC rose from $1.1bn last year to $5.1bn in 2021, but the share price remains depressed.