Royal Bank of Scotland and Standard Chartered were the weakest of Britain's seven largest lenders in a Bank of England stress test. For the second year, the central bank has subjected the UK's biggest lenders to tests to measure whether they would survive a financial shock.
This time, it was assumed that oil had fallen to $38 a barrel and that the global economy had slumped. No bank was ordered to come up with a new capital plan.
Out of the seven banks tested, RBS and Standard Chartered were found not to have enough capital strength, but both took steps to raise capital, so were not told to come up with a new plan, as Co-Operative Bank was last year.
Commenting on the results, RBS chief financial officer Ewen Stevenson said: We are pleased with the progress we have made relative to the 2014 stress test, but recognize we still have much to do to restore RBS to be a strong and resilient bank for our customers.
Standard Chartered's chief executive Bill Winters said: The results of the test demonstrate our resilience to a marked slowdown across the key markets in which we operate.
The test was conducted on our balance sheet as at the end of 2014. Since then we have made further significant progress in strengthening our capital position.
We are operating at capital levels above current minimum regulatory requirements and have a number of additional levers at our disposal to further manage capital.
However, all banks were told they would have to set aside capital to protect their UK exposures as part of a new measure that the bank is phasing in, called a countercyclical capital buffer”.
The extra cash should allow banks more room in times of economic decline to absorb losses from bad loans and other problems. It will mean the banks have to allocate more money to protect against lending losses in the UK, but some of this will be brought in from other reserves that the banks already have.