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* RBS had core capital of 5.7 pct in EBA test
* Result only narrowly above 5.5 pass mark
* RBS previously said its core capital was 6.7 pct
* RBS is examining how mistake was made (Adds RBS comment)
By Matt Scuffham
LONDON, Nov 21 (Reuters) - Royal Bank of Scotland admitted on Friday it submitted erroneous data for European bankstress tests in October and had in fact only just scrapedthrough, calling into question whether it can pass a tougherBritish test.
The revised result means that RBS, which is 80 percent-ownedby the British government, was the worst performing UK bank inthe European stress test, which assessed whether banks haveenough capital to weather another economic crash.
The revelation is another embarrassment for the bank, whichhas been fined in the past two weeks for failing to stop itstraders attempting to manipulate foreign exchange rates and fora computer systems failure two years ago which locked millionsof customers out of their bank accounts.
RBS said on Friday it held core capital under full Basel IIIrules of 5.7 percent after the adverse scenarios, scraping pastthe minimum 5.5 percent required. It had initially appeared topass the test comfortably, holding core capital of 6.7 percent.
"We are examining how this mistake was made, and will beworking with our regulators as we do so," RBS said.
Rival state-backed lender Lloyds Banking Group wasinitially understood to be the worst performing British lender,with core capital of 6.2 percent under the adverse scenarios.
The Bank of England's test will measure the resilience ofBritain's banks if house prices fell by 35 percent and interestrates rose to 6 percent. The results will be published onDecember 16.
Britain's regulator told banks just a week before the testthat they needed to use a stricter measure to assess theircapital than they had initially anticipated.
The stress test by European regulators was based on banks'capital position at the end of 2013 while the BoE's test willtake into accounts improvements made since.
RBS has strengthened its capital this year through a stockmarket listing of its U.S. business Citizens and other measures.It held core capital of 10.8 percent at the end of Septembercompared with 8.6 percent at the end of 2013.
The bank said on Friday that the stress test error did notimpact its latest reported capital position or its target tohold core capital of 12 percent by the end of 2016. (Editing by Steve Slater and Vincent Baby)
