UK banks may face stiffer stress tests

The Bank, spelling out how it will check that banks do not pose risks to the UK economy by being short of backing, said it would hold annual tests for major lenders like Barclays, RBS and HSBC starting in 2014.

Later tests would be broadened out to include big UK subsidiaries of major international banks, the Bank said.

Medium-sized British banks may also come under the scrutiny of Bank regulators and clearing houses could face their own health checks, the central bank said. “Stress-testing can provide a quantum leap in transparency and accountability,” Bank Deputy Governor Paul Tucker said.

Mike Trippitt, director of banks’ research at Numis Securities in London, said banks were already starting to see strong enough profits to build up capital buffers that would meet even a pessimistic stress test scenario.