The Bank of England’s stress tests published on 29 November showed that the seven large, systemically significant UK banks would be able to withstand a downturn even more severe than the Bank’s disorderly Brexit scenario.
This was only the second time that all seven lenders have been given clean bill of health since the Bank began the tests following the 2008 financial crisis.
As a result, the Bank of England stated: “no bank was required to take action to improve its capital position as a result of the stress test”.
In a note, S&P Global Ratings said: “This is a striking illustration of the extent to which bank capital requirements have been overhauled since the global financial crisis and the extent to which the major UK banking groups have strengthened their balance sheets.”
Local authorities have been running down their deposits with banks over the past few years, partly because they have had trouble balancing their budgets and have needed a ready source of cash, but also partly because of bail-in risk following the financial crisis.
