UK banks face test for global slump scenario

Britain’s seven biggest lenders will have to show they can cope with a global economic slump triggered by a sharp slowdown in China and a crash in the eurozone in this year’s round of stress tests conducted by the Bank of England (BoE).

The UK decided to introduce annual stress tests for its banks after the 2007 to 2009 financial crisis which required taxpayers to pump £66bn (€90bn) into Royal Bank of Scotland and Lloyds Banking Group.

“By assessing the resilience of the UK banking system against a major external shock, we will improve further our ability to identify vulnerabilities and we will ensure that banks have plans in place to address a wider range of possible stresses,” BoE governor Mark Carney said yesterday.