The Co-operative Bank has failed a "stress test" carried out by the Bank of England designed to see if the banking sector could withstand another financial crisis.
Lloyds Banking Group and Royal Bank of Scotland (RBS) were also found to be at risk in the case of “severe economic downturn”, the BBC reports. The Bank of England tested the lenders ability to withstand a 35% drop in house prices and a fall in the value of the pound by a third. Other factors in the “extreme scenario” included an unemployment rate of 12% and interest rates of 4.2%. The report said five other major banks passed the test. Bank of England governor Mark Carney said the test showed the banking sector was now “significantly more resilient”. He said: “This was a dem...
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