27/07/2010
Britain's major banks have been given a clean bill of health after passing stress tests, set by the European banking system.
Lloyd's Banking Group, was one of four high street banks that passed the most thorough examination of European banks ever undertaken, which included surviving difficult scenarios set for them by European Union regulators.
The Financial Services Authority (FSA), oversaw the testing of the UK banks on behalf of the EU and said the results showed "the preparedness and resilience of UK banks under unlikely adverse economic scenarios."
Some had been worried there was a chance Britain's banks could have been the cause of a double-dip recession, with banks refusing to lend to small businesses and individuals. However, lenders and customers can breathe a sigh of relief, as it emerged that British banks were the among the strongest in Europe.
The tests, which covered 91 banks, saw all but seven make the grade. Five Spanish lenders, one German bank and a Greek bank failed to pass.
The results will fill both individual and business customers with confidence and could lead to an increase in the number of businesses borrowing money from their banks.
The reduced risk of a double dip recession, combined with new found confidence in their banks lending schemes will encourage businesses customers to consider expanding their operations, which can be done through invoice discounting or sales finance.
Following the release of the stress test results, the FSA said in a statement to The Telegraph: "The resilience is a result of the considerable work that has been undertaken to strengthen UK banks in recent years."
Hannah McLaverty-Williamson