Co-operative, RBS and Lloyds fall short in BoE stress tests

Lloyds and Royal Bank of Scotland have fallen short in Bank of England tests to determine their resilience in the event of a new financial crisis, while the Co-operative Bank has been ordered to submit a new capital plan.

The Bank's stress tests, carried out with the oversight from the Prudential Regulation Authority (PRA) and the Financial Policy Committee, were designed to assess whether the UK's big banks could survive a spike in unemployment to 12%, a house price crash of 35%, and an interest rate hike.  The report suggested the Co-operative Bank would be especially vulnerable to housing market stress, and consequently its capital buffer is being reset and it must submit a new capital plan. However, the PRA said the Co-operative Bank had met all the targets it had been set over the last 18 months i...