The major UK lenders got an early Christmas present as the Bank of England waved through their capital-boosting strategies. Only our buy tip Royal Bank of Scotland (RBS) along with Standard Chartered (STAN) came up short on aspects of the 2015 stress test, and neither was required to take additional capital-raising steps beyond those they had already planned. So even these two laggards joined in the unified uplift in bank share prices on the day.
The BoE's financial stability report concluded that UK banks had become "more resilient in line with regulatory requirements". RBS did not meet the BoE's tier-one capital guidance, but taking into account the tier-one issuance it has achieved so far, as well as that planned, it was not required to submit a revised plan. Capital concerns are indeed reducing for the bank - the disposal of its North American operation, Citizens, had increased its pro-forma tier-one ratio to 16 per cent at the end of September. Now the bank has to work hard at improving income and margin to reverse the shares' downward trend.
