Seven out of eight of the UK's largest banks and building societies have passed the Bank of England's (BoE) latest round of stress tests, with the struggling Co-operative Bank being the only lender to have failed. BoE governor Mark Carney said that the results show that "the core of the banking system is significantly more resilient".
Was there ever any doubt. An idiotic set of conditions which are in the realms of fiction illustrating that those that have taken it upon themselves to safeguard the rest of us are utterly feckless . We have demonstrated once again that our banks are well up with events yet are having to compete globally with banks that do not suffer the same amount of regulatory interference and politically motivated meddling. Hello it is the only real source of tax revenue we have left.
The BoE will coral the press in a room which jams all communication devices - at 0700. They will then be told the results of the stress test. The general public will then be given a formal transmission stating the results @ 0800. All very cloak and dagger. All the big 5 will pass. The Co-op will fail. LLOY SP will rise but the decline of the FTSE will neutralise it completely. This could be a long cold winter. Weather: storm front bringing a long chill and icy winds............
And the EBA test, which revealed largely lower-than-expected adverse stress test capital ratios for the UK banks, raised some concerns about the ability of both Lloyds and RBS to begin paying dividends again. However, JPM reckons Lloyds will restart its regular payout to shareholders at its full-year results. By 2016 it could boast a dividend yield of 6%. Says the broker:
In our view, the exercise is unlikely to provide full clarity on the required amount of capital for UK banks and hence some uncertainty over capital return could persist. However, we believe that regulators are likely to be supportive of banks paying dividends based on sustainable earnings and with Lloyds likely to report statutory profits in 2014 (EPS of 2.1p) with a CT1 of 12.2%, we expect a resumption of dividend payments with the FY'14 results.
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