Royal Bank of Scotland has failed in a stress test administered by Bank of England and will be required to add around £2 billion in capital. The central bank’s annual exercise to determine the health of banks in the country exposed two other banks – Barclays and Standard Chartered – too but these banks need not have to change its capital structure for the moment. Bank of England said overall the U.K.’s banking system is in strong shape and could still keep lending to businesses and households even under a five-year scenario of economic turmoil roughly akin to the financial crisis. The test, however, did not cover the prospects of Britain leaving EU. The test measured the health of 7 banks – RBS, Barclays, Standard Chartered, HSBC, Lloyds Bank, Santander U.K. and Nationwide Building Society. RBS will be required to outline a new strategic plan early next year. The bank is facing the prospect of penal action from U.S. authorities over the sale of toxic mortgage-backed securities.
