UK banks pass EBA stress test - Banking - News - Moneyfacts

News News brings you the latest financial & economic news & reviews of the best products in the UK by our team of money experts.

UK banks pass EBA stress test

UK banks pass EBA stress test

Category: Banking

Updated: 27/10/2014
First Published: 27/10/2014

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The European Banking Authority (EBA) has published its latest review into the financial health of the banks in the European Union. The "stress test" aims to determine the resilience of the banks to further economic shocks – in other words, to see whether or not they could survive another financial crisis – and ultimately looks to repair the banking sector and restore confidence in financial institutions.

Well, the UK has passed with flying colours, with all four banking groups subject to the test (Royal Bank of Scotland Group plc, HSBC Holdings plc, Barclays plc and Lloyds Banking Group plc) meeting the objectives, meaning that they have sufficient capital to survive any shocks. Essentially, this means that the banks have been able to raise suitable funds and strengthen their capital positions – and it means that UK banking customers needn't worry too much about what would happen to their cash in the event of another downturn.

However, banks in other parts of the EU haven't been quite so lucky. Out of the 123 banks subject to review, 24 failed the stress test – and 14 still need to do more to balance the books. The review was based on the banks' balance sheet at the end of 2013, and so far 10 of the troubled banks identified have taken remedial action to bolster their finances. However, 14 need to take further measures to improve their capital position, and they have nine months to do so – or they could face being shut down.

The results of the test show that, for much of the EU, the banking sector is not only recovering, but is strong enough to weather any future financial storms. The majority of banks have met the criteria and are in better financial shape than they have been in years, but for the 14 banks in trouble – including four Italian banks, two Greek, two Slovenian, and one bank apiece in Austria, Belgium, Cyprus, Portugal and the Republic of Ireland – there's still work to be done. However, this shouldn't pose too much cause for concern for the UK, with all banks safely passing the health check, which should put the minds of UK customers at rest.

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

Related Articles

Debit card spending still leads the way

Many of us turn to plastic at the tills these days, particularly as contactless technology makes it easier than ever before. It’s little wonder that card spending continues to ramp up – and it’s debit card spending that’s leading the way.

Current account switching to be made even easier

It was announced today that the Current Account Switch Service (CASS) will be undergoing improvements that are to be implemented in a year’s time. This should help give more customers and businesses the confidence to switch to a better bank account.

A quarter of all card payments now contactless

The rise of contactless payments shows no signs of stopping, with new milestones being hit on a seemingly monthly basis. Well, another one has arrived, with new data showing that a quarter of all card payments are now made via contactless means.