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UK banks pass BoE tests, but Brexit risks ahead

Tuesday, November 28, 2017 - 01:37

Britain's banks all avoided bills for more capital in annual stress tests for the first time since 2014. But, as David Pollard reports, the Bank of England warned of pain ahead if there is no Brexit deal. David Pollard reports.

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Britain's banks have had to triple their capital cushions against potential losses ... Since the sector was devastated by the 2007 to 9 financial crisis. The move appears to be paying off. (SOUNDBITE) (English) BANK OF ENGLAND GOVERNOR, MARK CARNEY, SAYING: "For the first time since the bank began stress testing in 2014, no bank needs to strengthen its capital position as a result." Which, the governor, added, should make them resilient against THE big risk ahead .... (SOUNDBITE) (English) BANK OF ENGLAND GOVERNOR, MARK CARNEY, SAYING: "The banking system can continue to support the real economy even in the unlikely event of a disorderly Brexit." That assessment driving European shares up in early trade ... SOUNDBITE (English) CITY INDEX MARKET ANALYST, KEN ODELUGA, SAYING: "Users of banks depositors and of course the market can take heart from the fact that the financial system is in fact in theory three times stronger than it was and when these tests began." Though the report wasn't entirely a green light. All main UK lenders passed, but Barclays struggled to make it through the tests, relying on capital raised this year rather than in 2016. RBS got a mention for the same reason. And though the banks could help Britain through a disorderly EU divorce, the divorce itself could still carry a heavy price. (SOUNDBITE) (English) BANK OF ENGLAND GOVERNOR, MARK CARNEY, SAYING: "Slower growth, higher unemployment, higher inflation, lower sterling, higher interest rates, all things being equal. That's the direction, those are the broad directions." Carney warning that it was still unclear that banks would cope easily - IF hit by a triple whammy of disorderly Brexit, global recession - and more big fines for misconduct.

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UK banks pass BoE tests, but Brexit risks ahead

Tuesday, November 28, 2017 - 01:37