The UK’s banks proved they could withstand an economically calamitous ‘disorderly Brexit’ with the latest round of stress test results – though some lenders came off better than others.
The Bank of England’s scenario – which included a 33% drop in house prices, the doubling of unemployment, 4% interest rates and a 4.7% plunge in UK GDP – would see the nation’s lenders lose £50 billion in capital but, crucially, come out the other side. Just 10 years ago that figure would have wiped the sector out, showing the progress that’s been made since the financial crisis.
However, while all 7 lenders passed for the first time since 2014, Barclays (LON:BARC) and RBS (LON:RBS) only did so by the skin of their teeth, with both banks reliant on capital raised throughout 2017 rather than their 2016 end-point like their peers. Neither were too fussed, however; RBS jumped half a percent, likely in relief that it passed as it was the most unlikely to do so, while Barclays slipped 0.3%, investors displeased with how close it was to failing. As for the rest of the sector, Standard Chartered (LON:STAN) was up 0.3% and HSBC (LON:HSBA) 0.6%, but with Lloyds (LON:LLOY) dipping 0.2%.
All this meant the FTSE could ignore its ropey mining sector – the likes of BHP Billiton (LON:BLT) and Antofagasta (LON:ANTO) are down more than 1% – could eke out a 0.2%, 7400-crossing rise after the bell. The pound, meanwhile, was slow out of the starting blocks, nudging 0.1% higher against the dollar (though cable’s well off yesterday’s 8 week peak) but sitting flat against the euro.
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