Ulster Bank owner The Royal Bank of Scotland (RBS) and Standard Chartered have emerged weakest in the latest Bank of England stress test.
The banks did not have enough capital strength to meet some of the measures laid down as part of the annual MoT of lenders’ capacity to deal with financial shocks.
Regulators allowed the banks to pass the overall test after considering steps they had taken to shore up their central reserves and crisis survival strategies.
Meanwhile Barclays, HSBC, Lloyds Banking Group, Nationwide Building Society and Santander UK cleared the assessment.
Governor Mark Carney said the UK lending sector was “already most of the way there” and the results showed banks were “significantly more resilient” today than before the global financial crisis.
The improvement was testament to reforms brought in after the 2008 meltdown that have “have rebuilt capital and confidence in the UK banking system”, he explained.
Speaking as the results were published Mr Carney also noted concerns over lending practices in the buy-to-let market, saying the Financial Policy Committee (FPC) will “monitor developments in buy-to-let activity closely.”
It is the second year that the Bank of England has put UK lenders through their paces by simulating a major financial crisis.
The FPC’s latest assessment of global markets was that growth continued to be sluggish and both emerging and developed markets posed challenges.
This year’s stress test used a scenario where Chinese growth stalled dramatically, causing a housing market crisis in China and Hong Kong, plus a collapse in the price of oil to $38 (£25) a barrel.
The model also included a three-year slowdown in Europe and a sharp fall in commodity prices.
In the event of such a seismic shock to the global financial system the Bank predicted profits across the board would fall by £100 billion at their lowest point, the report said.
Meanwhile the banks would lose a total of £37bn from their central reserves, around two thirds.