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U.K. Lenders Prove Resilient in Bank of England Stress Test

  • Central bank says all banks would cope with severe conditions
  • Stressed scenario for banks examined 37% GDP contraction
The Bank of England in the City of London, U.K.

The Bank of England in the City of London, U.K.

Photographer: Chris J. Ratcliffe/Bloomberg

The Bank of England said the U.K.’s eight largest lenders all passed its latest stress test, concluding they can weather a double-dip recession and Covid-19 societal adjustments that last for years.

The firms would have enough capital to continue lending through a severe shock to the economy, according to the results released on Monday. Failing loans would pull capital levels down to an aggregate 10.5%, comfortably above the 7.6% the BOE used as a minimum, according to the Financial Stability Report published Monday.