Bank of England’s Stress Test might Require Some Banks to Curb Dividend Payouts

This week, some of the big banks in Britain might be forced to shrink their plans for dividend payouts after the Bank of England releases its results of ‘stress tests.’

The results awaited will come out tonight when the banks will learn if they have successfully passed through the stress test initiated by the Bank of England. The new stress test following the collapse of bank HBOS which  was told it had “less than” a little chance, one in 100,000 of failing the then imposed stress test by the regulator at that time which was three years before it nearly collapsed still keeps the banks under stress.


Though most of the big banks are likely to pass through the financial stability tests, but some of the others might be forced to restrain shareholder payments in order to hold more money for crisis situations, if any.


The weakness of the old stress test regime was revealed in one of the pages of the incendiary report that was published ten days looking into HBOS’s failures.


The new set of tests will probably be tougher for banks to pass. Standard Chartered has to pay a closer attention with HSBC following with a lesser extent.