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Britain's state-backed lender Lloyds Banking Group narrowly passed a test set by European regulators to assess whether banks have enough capital to weather another economic crash.
Lloyds, which is 25 per cent owned by the British government after being rescued during the financial crisis of 2007 to 2009, would hold a core Tier 1 capital ratio of 6.2 per cent under the stress-test scenarios, above the 5.5 per cent minimum required.
The close outcome could have implications for Lloyds, which is in talks with Britain's financial regulator about restarting dividend payments and must prove it has the capital strength to cope with future market shocks to gain permission to do so.
Rival state-backed lender Royal Bank of Scotland, which is 80 per cent owned by the government, would hold core capital of 6.7 per cent under the adverse scenarios, the European Banking Association said.
Barclays passed the test with core capital of 7.1 per cent and HSBC passed with core capital of 9.3 per cent.
The Bank of England said the result of a health check of banks across the European Union should not be seen as indicative of the result of its own planned stress tests. The results of its UK test will be published on Dec. 16.
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