Bank of England: High street lenders CAN cope with a no-deal Brexit

Posted On: 
28th November 2017

The top banks in Britain have the means to cope with a no-deal Brexit, according to stress tests by the Bank of England.

Bank of England Governor Mark Carney said the UK should be "resilient" to economic risks
Credit: 
PA Images

A new paper by the Financial Policy Committee said high street banks including Lloyds, HSBC and Barclays all held enough capital to cope with losses of £50bn over two years.

The Bank of England modelled a nightmare scenario whereby UK GDP plummets by 4.7% with a 9.5% rise in unemployment and interest rates soaring to 4% in the face of sterling devaluation.

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The verdict was that UK banks could “continue to support the real economy through a disorderly Brexit”.

But it said if there were a tough downturn in global wealth it may have to reconsider its assessment.

“The combination of a disorderly Brexit and a severe global recession and stressed misconduct costs could result in more severe conditions than in the stress test,” it warned.

The BoE said banks will have to hold an extra £6bn in capital within the next year and possibly more depending on the risks to the sector.

Governor Mark Carney said: “The FPC is taking action to ensure the financial system is resilient to a very broad range of risks so that the people of the UK can move forward with confidence that they can access the financial services they will need to seize the opportunities ahead.”