LONDON: Britain's top seven banks and building societies will have to show they could withstand a global slump triggered by a sharp slowdown in China and a crash in the euro zone in this year's stress tests.
The Bank of England also said the 2015 tests would exclude the Co-operative Bank which failed last year's health check and is deep in a restructuring programme.
The theoretical global downturn that the banks will have to prove they could survive includes shocks such as contraction of more than 2 percent in the euro zone economy, home to key British trading partners.
It also sets out a slowdown in growth in China to 1.7 percent by the end of this year, tipping Hong Kong into a deep recession. That would cause a 40 percent slump in Hong Kong property prices, hitting some British lenders such as HSBC.
Last year's tests, in which the Co-op was the only lender to fail, largely focused on a 35 percent crash in UK housing prices amid concerns at the time that the British property market was heading for bubble territory.
In the 2015 tests, the British house price fall was set at 20 percent over the five-year scenario period, the BoE said.
The UK-specific focus last year prompted some critics to say HSBC and Standard Chartered, which have large exposures to Asia, got off lightly.
"By assessing the resilience of the UK banking system against a major external shock, we will improve further our ability to identify vulnerabilities and we will ensure that banks have plans in place to address a wider range of possible stresses," BoE Governor Mark Carney said in a statement.
Barclays, HSBC, Standard Chartered, Royal Bank of Scotland, Nationwide, Santander UK and Lloyds will be tested this year and the results are due to be published in December.
The BoE said it excluded the Co-op this time round because it now has a smaller balance sheet and will have a more limited role in payment systems in the future.
"So the resilience of Co-operative Bank is unlikely, on its own, to have a material impact on the resilience of the financial system," the BoE said.
Banks will have to show they can maintain a core capital ratio, a key benchmark of solvency on a risk-weighted basis, of 4.5 percent after being exposed to the theoretical shocks, the same pass mark as 2014.
Concerns among global policymakers about shrinking liquidity in markets have also shaped aspects of this year's stress test.
The BoE has pointed to a surge of U.S. Treasury bond prices last October after economic data sparked a mass sell-off, raising questions about the ability of investors to sell even very liquid assets when they want to.
However, in the 2015 tests, the banks will also have to show they can maintain a Tier 1 leverage ratio of 3 percent, a measure of capital-to-assets on a non-risk weighted basis, a new addition to the examinations.
The seven banks, which account for 70 percent of UK corporate loans and 75 percent of UK mortgages, will also have to show they can expand lending to the UK economy by 10 percent during the test.
Where banks scrape a pass, they may still have to boost their capital levels or take other, unspecific action.
RBS and Lloyds were required to bolster their capital defences despite passing last year's tests.
Britain decided to introduce annual stress tests for its banks after the 2007-09 financial crisis which required taxpayers to pump 66 billion pounds into RBS and Lloyds.
The BoE is likely to consider including the UK arms of foreign banks in future stress tests.
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