Top firm fails toughest stress tests; announces revised capital plan

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The poorest performer of the seven lending institutions examined.

The Royal Bank of Scotland (RBS) announced a revised capital plan on Wednesday as the results of the Bank of England's (BOE) latest round of stress tests on the U.K. banking system revealed it as the poorest performer of the seven lending institutions examined.

From a capital adequacy perspective, RBS, Barclays and Standard Chartered were the three banks which failed to surpass the complete set of hurdles tested by the Bank of England.

RBS' updated plan was approved by the Bank of England's Prudential Regulation Authority (PRA) on Tuesday evening ahead of Wednesday's announcement that the bank had failed to meet two if its key measures of financial strength.

RBS' relative weakness was largely due to its sensitivity to ongoing conduct fines, impairments and regulatory changes to risk-weighted asset requirements. The risk profile of its book – more weighted towards the worse performing unsecured, corporate and globally exposed loans than the better-performing domestically focused secured loans – also affected its stress test performance.

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