Stress tests underline banking sector fragility

Last week started on a relatively poor note for the UK, as the nation’s banks came off rather worse than most others from the European Banking Authority’s recent round of stress tests. Admittedly, none of the four major UK banks actually ‘failed’ the tests. Nonetheless, their capital ratios dropped particularly sharply under the “adverse scenario”. A fragile banking system looks set to remain a major drag on the recovery for the foreseeable future.