All seven UK banks pass BoE stress tests

Investors took confidence from Carney's affirmation that banks would need to hold Tier 1 equity of 11% of risk-adjusted assets by 2019, which is less than the 13% that was already held in aggregate by the major banks in September.

While all banks passes the main stress test scenario of weathering a theoretical deterioration in global economic conditions, the Royal Bank of Scotland failed to meet its individual capital guidance requirements and Standard Chartered failed to reach its so-called Tier 1 minimum capital requirement of 6%. However, both lenders have strengthened sufficiently since to pass muster.

Capital was considered to be adequate at the other five lenders included in the tests: Barclays, HSBC, Nationwide Building Society, Lloyds and Santander UK.

Some bank analysts complained that the stress test assumptions for banks’ trading books were not harsh enough as crude oil futures were already at the levels assumed in the tests.

But speaking after the release of the stress test results, Governor Carney said Britain’s financial system was significantly more resilient than before the financial crisis, with banks’ holdings of liquid assets now four times larger.

In its December Financial Stability Report, published alongside the Bank’s stress test results, the Financial Stability Board judged the UK’s financial system had moved out of its phase of heightened risk aversion following the global financial crisis.

While the FSB decided to keep its counter-cyclical capital buffer rate at 0%, it suggested it may soon increase the buffer to "in the region of 1%" as the UK economy recovers from the crisis and risks to stability re-emerge, although any increase is likely to be gradual.

With Barclays, HSBC, RBS and Standard Chartered designated "global systemically important banks" (GSIB) and therefore being held to higher standards, their buffers will need to range from 1% to 2.5% of CET 1 capital. The Bank said these GSIB buffers will start transitioning from 2016.

The FPC seemed quite relaxed about the state of the banking system, economist Sam Tombs at Pantheon Macro observed, adding that the FPC could raise the capital buffer as soon as its next meeting in March.

"We doubt, however, that this will do much to subdue credit growth, since banks already hold more capital than they need.

"Banks actions to raise significantly more capital over recent years mean that a gradual recovery in lending remains in prospect, providing only modest support to the economic recovery at a time when fiscal squeeze and strong pound will be depressing growth."

As of 08:06 shares in Lloyds were trading 2.55% higher to 74.84p, RBS stock was up by 2.41% to 309.6p, Barclays 1.88% higher at 227.4p, Standard Chartered up 1.7% at 566.7p and HSBC up 1.1% at 535.3p.