Profits at Britain’s leading banks would collapse by £91 billion in the event of a new financial crisis, forcing the country’s largest lenders to slash shareholder payouts and implement swingeing cost cuts, according to the Bank of England’s latest industry stress tests.
The Co-operative Bank, the only lender to fail the tests, would find itself with a new black hole in its finances if the property market were to crash and the economy take a nosedive, while Lloyds Banking Group and Royal Bank of Scotland would both come close to breaching their minimum capital requirements.
In the case of Co-op Bank, its management has been forced to submit a new capital plan that will shrink its balance sheet by a third by the end of