UPDATE 1-British banks can withstand pandemic fallout on economy -BoE

(Adds more detail)

LONDON, May 7 (Reuters) - A "desk top" stress test has shown
that top banks and building societies could keep lending to an
economy hit by anticipated fallout from the coronavirus
pandemic, the Bank of England said on Thursday.

The BoE's interim Financial Stability Report (FSR) said the
stress test was based on an economic scenario outlined by the
Bank's Monetary Policy Report (MPR).

Under the MPR scenario, Britain's GDP drops by almost 30% in
the second quarter versus the fourth quarter of last year and
recovers as lockdown restrictions are lifted.

Britain has been in lockdown since mid-March and the
government is expected to announce some easing of restrictions
in the coming days.

The stress test showed that banks have the capital buffers
to withstand even greater losses than those that result from the
MPR scenario, the FSR said.

"Overall, in the desktop stress test based on the MPR
scenario, banks incur total credit losses of just over 80
billion pounds ($98.86 billion)."

"Overall, banks have the capacity to assist businesses in
meeting cash-flow deficits by expanding the supply of credit to
the economy."

($1 = 0.8093 pounds)
(Reporting by Huw Jones; editing by Maiya Keidan and Jason
Neely)