Bank of England forces banks to hold extra £6bn Brexit buffer

First stress tests where no bank has had to add to capital position

The Bank of England has raised the UK countercyclical capital buffer rate from 0.5% to 1%, establishing a system-wide total buffer of £11.4bn to protect against the potential risks arising from possible Brexit outcomes.

According to its latest Financial Stability Report, the BoE said a combination of a "disorderly" Brexit, severe global recession and stressed misconduct costs could result in "more severe conditions" than the ones stressed tested. The BoE has also called on the UK and European Union to introduce legislation to avoid a post-Brexit crisis in the derivatives and insurance markets, according to the Financial Times. The report said: "To preserve continuity of existing cross-border insurance and derivatives contracts, UK and EU legislation would be required. "Six million UK policyholders...