The most recent stress test conducted by the Bank of England has concluded that the resilience of the UK banking system has “improved significantly” since 2013.

The 2014 stress test covered eight major UK banks and building societies, and was designed specifically to assess their resilience to a very severe housing market shock and a sharp rise or snap back in interest rates.

The eight FIs tested were Barclays Bank, Co-operative Bank, HSBC Bank, Lloyds Banking Group, Nationwide Building Society, Royal Bank of Scotland, Santander UK and Standard Chartered.

The board of the Prudential Regulation Authority (PRA) decided that the exercise did not reveal capital inadequacies for five out of the eight participating banks, based on their balance sheets at the end of 2013 (Barclays, HSBC, Nationwide, Santander UK and Standard Chartered).

Given other improvements over the course of 2014 in relation to Lloyds and RBS, only the Co-operative Bank was required to submit a revised capital plan. The Bank of England’s Financial Policy Committee’s (FPC) agreed that the results of the stress test meant that no system-wide action was required for the UK banking sector.

Mark Carney, governor of the Bank of England, said: “The stress test completes our capital framework by informing judgments about the appropriate size of capital buffers for individual firms and for the system as a whole. It is a major component of both our macro- and micro-prudential regimes.

“As a joint exercise between the PRA and FPC, it demonstrates the major synergies possible across the Bank of England. This was a demanding test. The results show that the core of the banking system is significantly more resilient, that it has the strength to continue to serve the real economy even in a severe stress, and that the growing confidence in the system is merited.”

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