BoE raises hurdle for banks in 2018 stress test
The Bank of England (BoE) said this year’s stress test of major banks will include how non-core capital buffers stand up to market and economic stresses.
The test, introduced since the financial crisis a decade ago forced British taxpayers to bail out several lenders, has focused on the resilience of a bank’s core capital buffer.
But the BoE said on Thursday that this year’s test “hurdle” will also include secondary buffers held by the banks to reflect their domestic and global systemic importance.
The BoE said the “uplifts” resulting from including the secondary capital buffers in the tests would add 2.5 percent to the overall hurdle rate of Lloyds Banking Group (LLOY.L), and 1 percent to those of Barclays (BARC.L), HSBC (HSBA.L), Royal Bank of Scotland (RBS.L), Santander UK and Nationwide.