posted at 19:50
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RBS admits European stress test blunder
Revised figures revealed Friday showed that instead of passing the test easily as initial results from the exercise showed, the state-owned RBS had narrowly scraped through and was the weakest performer among Britain's banks. The stress tests ran the banks through two different economic scenarios to see whether their balance sheets were healthy enough to withstand further economic shocks. Under a baseline scenario, a bank's core capital ratio, a measurement of financial strength, must not fall below 8.0 percent. In the adverse scenario, it must not fall below 5.5 percent. The Edinburgh-based bank has now admitted that part of its modelling had been wrong and this should have been 5.7 percent - barely above the minimum. The worst results from the stress tests were concentrated in Italy, where some nine banks failed, as well as Greece and Cyprus with three each. The RBS revelation came the day after British financial regulators fined the bank a combined £56 million for a series of IT failures that left customers unable to access services. The bank is about 80-percent owned by the British government after it was rescued with £45.5 billion of taxpayers' cash during the global financial crisis, making it the world's biggest-ever banking bailout.

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