The Bank of England (BOE) may be worried about Brexit, but it'sconfident about the strength of the banks it regulates to weatherany storm.

The U.K.'s seven largest lenders all passed the central bank'slatest stress test, showing they're strong enough to continuelending even during a no-deal Brexit that could send the economyinto a tailspin.

|

See also:


|

The central bank's stress test was even tougher than the dire“disorderly Brexit” scenario, which the BOE also releasedWednesday. That analysis includes an 8 percent drop in economicoutput within a year, a 25 percent drop in the pound, and a 30percent plunge in house prices.

In the stress test, two lenders—Barclays Plc and Lloyds BankingGroup Plc—triggered the conversion of some subordinated debt toequity to replenish their capital. Lloyds' exposure to U.K. housingand Barclays' large consumer focus make them more vulnerable todisruptions in the economy. No such conversion occurred for theother banks.

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.