December 1, 2014 / 7:48 AM / 3 years ago

Britain's Co-operative Bank to fail Bank of England stress test: Times

LONDON (Reuters) - Britain’s Co-operative Bank COOBF.PK is set to fail the Bank of England’s stress test of eight leading lenders this month, The Times newspaper said on Monday.

A sign for the Co-operative Bank is seen outside it's branch in the City of London August 22, 2014. REUTERS/Andrew Winning

The eight banks are being tested on their ability to withstand a theoretical 35 percent crash in house prices and surging unemployment and interest rates, with the central bank’s Prudential Regulation Authority due to announce the results on Dec. 16.

The Co-op bank is thought to have acknowledged that it has insufficient buffers to withstand a very severe recession, in spite of building 1.9 billion pounds ($2.97 billion) in extra capital in the past 12 months, the newspaper said.

The bank nearly collapsed last year and fell under the control of bondholders when a 1.5 billion pound capital shortfall was identified shortly after the collapse of its attempt to buy 631 branches from rival Lloyds LLOY.L.

Reporting by Huw Jones; Editing by David Goodman

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