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Barclays, Banco BPM scrape through EU-wide banking health check

LONDON, Nov 2 (Reuters) - British banks Barclays and Lloyds, and Italian lender Banco BPM fared worst on Friday in a European Union wide stress test of banking resilience to simulated market shocks.

Analysts have said that banks who fail to complete the "adverse" or toughest part of the test without preserving a capital ratio of well above 5.5 percent, when all new and planned capital rules are applied, risk having to raise more capital or sell risky assets.

While none of the 48 lenders tested broke below 5.5 percent, Barclays ended with a ratio of 6.37 percent, Banco BPM with 6.67 percent, and Lloyds with 6.8 percent. Italy's UBI ended with 7.46 percent.

Capital at the UK banks were particularly hit due to their exposure to credit other than secured loans like mortgages.

The EBA said the adverse scenario dented the core equity capital ratio across the 48 banks tested by 395 basis points when all new and planned capital rules are applied, higher than in the last test in 2016 due to credit losses.

This was EBA's toughest test yet, but banks started out with higher capital buffers than in the past.

"The outcome of the stress test shows that banks' efforts to build up their capital base in the recent years have contributed to strengthening their resilience and capacity to withstand the severe shocks and material capital impacts of the 2018 exercise," said Mario Quagliariello, director of economic analysis at the EBA.

The EBA said that 25 of the 48 banks tested triggered thresholds requiring them to calculate curbs on dividends and other payouts totalling 52 billion euros ($59.19 billion).

The results will be used by banking supervisors to determine capital levels at individual lenders.

Britain's banks are awaiting next month's results of a separate annual stress test conducted by the Bank of England.

($1 = 0.8786 euros) (Reporting by Huw Jones and Lawrence White)