The Co-operative Bank failed the Bank of England’s first stress test, which tested banks’ ability to withstand shocks to the system including a rise in the employment rate to 12% and a one-third fall in house prices.
As a result, the bank has agreed a plan with the regulator that will see it reduce assets by £5.5 billion by 2018. Royal Bank of Scotland Group, which along with Lloyds Banking Group managed to pass the test, will sell
£2 billion in notes to boost capital.
BoE Governor Mark Carney said the test was demanding and showed the banking system “has the strength to serve the real economy even in a severe stress.”
Click here for the full Bloomberg article
The Guardian, p. 23
