Royal Bank of Scotland (RBS) has been forced to boost its capital plan after failing the latest round of Bank of England stress tests.
The 2016 tests, which probed UK banks' resilience to a global recession scenario, also revealed "capital inadequacies" at two other big players - Barclays and Standard Chartered - but, unlike RBS, they were not asked to submit revised capital plans.
The Prudential Regulation Authority said: "Based on RBS's own assessment of its resilience identified during the stress-testing process, RBS has already updated its capital plan to incorporate further capital strengthening actions and this revised plan has been accepted by the PRA board. The PRA will continue to monitor RBS's progress against its revised capital plan."
RBS CEO Ewen Stevenson said: "We are committed to creating a stronger, simpler and safer bank for our customers and shareholders. We have taken further important steps in 2016 to enhance our capital strength, but we recognise that we have more to do to restore the bank's stress resilience, including resolving outstanding legacy issues."
The PRA's tests also covered other UK banking giants, including HSBC, Lloyds, Banco Santander SA's UK arm and Nationwide Building Society.
The 2016 stress test incorporated a synchronised UK and global recession with associated shocks to financial market prices, and an independent stress of misconduct costs.
The banks had to retain capital equivalent to 4.5% of their assets weighted by risk to pass the stress test hurdle, as well as achieving Pillar 2A in the stressed scenario, which varied depending on individual risks for each bank.
Despite RBS' failing, the PRA said "the banking system is in aggregate capitalised to support the real economy in a severe, broad and synchronised stress scenario".
'Fighting the last war'
Commenting on the latest stress tests, Aberdeen Asset Management's chief economist Lucy O'Carroll said: "There is always a danger that these tests are effectively fighting the last war rather than the next one. They are based on scenarios which might, or have, come to pass yet the Bank of England can't fully predict what will actually happen.
"But this is a worthwhile exercise. 2016 has shown what uncertain times we are in and the tests demonstrate that the banking sector is broadly well capitalised.
"The individual vulnerabilities show that the job of ensuring our banks are capable of withstanding shocks remains challenging. The tests give banks no opportunity for complacency, which is a good thing.
"This year has illustrated how the apparently unthinkable can happen and we all need banks that can absorb the inevitable unforeseen shocks."
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