Oil producers have agreed to cut production by 1.2m barrels a day, to 32.5m, in an attempt to ‘stabilise the market’ and push crude prices higher.
Closing summary: Will “historic deal” hold up to scrutiny?
Deal finally agreed in Vienna
Opec president: It’s a historic move
But deal relies on cuts by Russia
Table: Details of the cuts
Iran allowed to pump more
6.18pm GMT
Here’s a snap summary, for new readers just tuning in.
Opec as defied sceptics and agreed its first production cut since the financial crisis struck. The oil cartel will shave 1.2 million barrels per day off its output, cutting it from 33.7m to 32.5m barrels per day.
The price of oil has surged by 8% after the 14-nation cartel Opec agreed to its first cut in production in eight years.
Confounding critics who said the club of oil-producing nations was too riven with political infighting to agree a deal, Opec announced it was trimming output by 1.2m barrels per day (bpd) from 1 January.
Related: Oil price surges as Opec agrees first cut in output since 2008
5.55pm GMT
Paul Dean is Global Head of Oil & Gas at legal firm HFW, questions whether today’s deal will really stabilise the markets, as Opec hopes.
The known unknowns are how Russia will react and whether it will lead to an increase in US production. The US picture made more complex from a geopolitical perspective by Trump’s threatened ban on the import of Saudi crude.
Therefore while there are certainly positives for the market to take from this agreement the jury must still be out on whether it is going to lead the stability that is so desperately needed.
5.41pm GMT
Now this is interesting.... Russia’s energy minister Alexander Novak has welcomed Opec’s decision to cut output by 1.2m barrels per day.
He also confirms that Russia is ready to gradually cut oil output by up to 300,000, but only gradually because of “technical issues”, reports Reuters.
This will be fun..... RUSSIA TO GRADUALLY REDUCE OIL OUTPUT BY 300,000 BPD PROVIDED OPEC HONORS ITS OUTPUT AGREEMENTS - NOVAK
#Russia | Novak: ready to gradually cut #oil production by up to 300kbd. only "gradually" bcuz of technical issues. reuters. #OOTT pic.twitter.com/169nGuUfS4
5.22pm GMT
Shares in oil companies have jumped sharply; Royal Dutch Shell has rallied by 4.2%, followed by BP up 3.8%.
5.17pm GMT
This deal is a mixed blessing for the UK.
On the upside, it makes North Sea oil more valuable. Scotland’s oil industry should benefit from Brent crude surging 8% to $50/barrel; that’s good for jobs.
5.12pm GMT
5.10pm GMT
Chatham House fellow Valerie Marcel points out that Saudi persuaded its fellow cartel members to share the pain, rather than taking the hit alone.
What seems most significant in #OPEC announcement = Saudis won on principle that wouldn't cut alone. In that respect, Naimi policy. #OOTT
5.09pm GMT
Energy analyst Dominick Chirichella believes today’s deal is significant, especially if non-Opec members cut output by 600,000.
IF this is truly a total cut of 1.8 mil bpd effective 1/1/17 this is overall bullish and will accelerate global oil overbalancing in 2017
When we look back at today it could be a turning point in oil price dir at least for the med term as OPEC once again swing producer
4.58pm GMT
Important point: Opec are NOT using Indonesia’s suspension to fiddle their output figures. They have genuinely agreed to cut output by 1.2m barrels per day.
There you have it folks #OPEC have actually agreed on something!! #DEAL #OOTT
4.56pm GMT
Journalists in Vienna have just been handed the new output table, explaining the details of today’s agreement to reduce output by 1.2m barrels per day.
And it confirms that Saudi Arabia will take the bulk of the cuts, cutting almost 500,000 barrels per day.
The table #Opec #oott #oil pic.twitter.com/XT9Ho4Ythp
4.46pm GMT
The Opec press conference is now over. I’ll pull a summary together ASAP.
In the meantime, here’s some instant analysis from Mike Jakeman of the Economist Intelligence Unit:
1) It's the first time the group has achieved co-ordinated action since 2008. This alone makes it significant.
2) Saudi will bear the brunt of the cuts. Deal an admission that previous strategy, of driving US shale producers to the wall, has failed.
3) We do not expect the production cut to lead to a transformative increase in prices.
4) It is possible that some cheating will occur. OPEC's members do not have a good track record of sticking to production quotas.
5) There has been no firm commitment yet from Russia, the largest non-OPEC producer. Russian production could fill the gap left by Saudi.
6) Production even at the lower level of 32.5m b/d is still high. No threat of an oil shortage that could see the price zoom back up.
7) A sustained rise in prices would trigger a response from US shale producers, pushing the price back down again.
8) Low prices are here to stay, folks!
4.39pm GMT
Q: What do you say to the naysayers who thought Opec was no longer relevent?
Opec is still Opec, Saleh Al-Safa replies. If we weren’t there, balancing the interests of members and non-members, we wouldn’t have a deal today.
4.37pm GMT
Q: Won’t this deal backfire on Opec, if higher prices encourage rival producers such as the shale industry back into the market?
We don’t see a threat from shale gas, Opec president Mohammed Bin Saleh Al-Sada replies. They will make their own assessment, regardless of what we do.
4.32pm GMT
Onto questions...
Q: Why is Opec’s new floor still 32.5 million barrels, even though Indonesia (which pumps 700k) have been suspended? Surely it should be lower?
4.24pm GMT
This is “major step forward and a historic agreement”, Mohammed Bin Saleh Al-Sada declares.
It will help to rebalance the market, and reduce the overhang of excess oil supplies.
4.22pm GMT
Opec are also setting up a new ministerial monitoring committee to ensure compliance with this deal, chaired by Kuwait, Venezuela and Algeria.
Established a ministerial monitoring committee (KU, VZ, ALG) which will work with OPEC sec to monitor implementation and compliance
4.21pm GMT
OPEC president Mohammed Bin Saleh Al-Sada says that today’s agreement is contingent on non-Opec members agreeing to cut their own output by 600,000 per day.
And he reveals that Russia has already agreed to reduce output by 300,000 per day.
OPEC seeking 600k b/d reduction from non-OPEC. Russia committed to 300k reduction #OPEC #OOTT
4.17pm GMT
The Opec press conference is starting now!
With the co-operation and understanding of all member companies, we have been able to reach an agreement.
This agreement comes from a sense of responsibility for Opec member companies, and for non-Opec member countires, and the health and wellbeing of the world economy.
4.10pm GMT
Iran’s oil minister Bijan Namdar Zangeneh has just walked past the press pack, saying that he is “happy” with today’s meeting.
Iranian Minister Zanganeh Says `Very Happy' After OPEC Meeting
Very happy Zanganeh walks out #OPEC #OOTT pic.twitter.com/nAg2MPRm2C
4.07pm GMT
The Opec press conference is now an hour late, but there are signs that ministers have finally completed today’s meeting.
#OPEC meeting over! Mins will come out now!! #OOTT
All 14 OPEC ministers lining up for photograph
11:05:39
Indonesia clearly not expelled quite yet (rtrs)
4.02pm GMT
If Opec have agreed a deal, it will surprise many analysts who thought the cartel was a busted flush.
Naeem Aslam of Think Markets explains:
This is certainly the best present traders could have for Christmas - a supply cut from OPEC. The cartel has shown united front and this is what matters the most.
There have been so many doubts over the year if they have the ability to deliver anything and today they have.
It appears that in the most critical of moments, Saudi Arabia, Iran and Iraq have solved their difference consequently propelling oil prices further.
While the deal is undeniably impressive, there are still some questions that need to be answered at the press conference. Reports of Indonesia being suspended from the cartel could probe the effectiveness of the production cut, as Indonesia continues to produce 750,000 barrels per day but this will not be included in the OPEC figures
3.51pm GMT
Financial news service Ransquawk has helpfully rounded up the various Opec rumours:
OPEC - What we know so far...#OOTT #CL pic.twitter.com/ebmkFGdLgh
3.47pm GMT
Running an oil cartel must be hungry work, so we won’t begrudge the energy ministers for breaking off for some (late) lunch.
Leslie Hayward of Energy Fuse is in Vienna, and hearing that the talks might have restarted....
Still waiting on announcement. Rumors now that lunch is over but ministers are resuming meeting again. #OPEC
3.31pm GMT
Here’s Reuters’ latest dispatch from Vienna:
“OPEC has proved to the sceptics that it is not dead. The move will speed up market rebalancing and erosion of the global oil glut.”
“It will mean that we (Saudi) take a big cut and a big hit from our current production and from our forecast for 2017.”
3.17pm GMT
The Opec press conference has been delayed, with insiders saying today’s agreement is being drafted now.
*OPEC Deal Being Drafted
*Indonesia OPEC Suspension Doesn't Significantly Affect Size of Cut: Sources @WSJ
One thing is guaranteed with OPEC and that is a delay to the start of their press conference!
3.00pm GMT
Opec is due to hold a press conference shortly to announce the conclusions of today’s meeting.
It should be streamed online here.
2.57pm GMT
There’s a rumour swirling that Indonesia might have been suspended from Opec today.
That would free up its quota (more than 700k barrels per day) to be shared among other members of the cartel.
Reports: #OPEC has removed Indonesia's membership, giving it 740k b/d of wiggle room. Sort of like cutting off your arm to lose weight #OOTT
Let's see. Take out Indonesia (722kbd in Oct acc to secondary sources) and Opec prod is at 32.91m b/d. Not far to 32.5m b/d #oott
Rumored #OPEC deal breakdown
Saudi cut to 10.06
Iran freeze 3.797
Indonesia out
Iraq freeze 4.55
Contingent on Nopec (Russia) cutting
Apologies the #OPEC source mistyped the number! #Iran to freeze at 3.797 and this will change a bit when Indonesia is out #OOTT
2.37pm GMT
Newsflash: America’s Dow Jones stock markets has hit a new record high at the start of trading in New York.
The Dow jumped 70 points, or 0.36%, to 19,191 points - with energy stocks boosted by reports of an Opec production cut (which still hasn’t been confirmed, remember!)
BREAKING: Dow opens at another record high https://t.co/lSfYjkLWsP pic.twitter.com/iUDNysmjsK
2.24pm GMT
While we wait for more action in Vienna, here’s a video explaining the Bank of England’s new stress tests (which Royal Bank of Scotland failed this morning).
Today we published the results of our latest bank stress-testing exercise. But what exactly is stress testing? #stresstest pic.twitter.com/31cBK8JbOb
2.09pm GMT
Gulf Energy correspondent Amena Bakr reports that Iran has agreed to fix its oil production at around 3.8 million barrels per day, helping to get today’s deal over the line. (corrected)
If so, that means Tehran has avoided having to cut output -- a real sticking point, as Iran has been ramping up production since sanctions were relaxed at the start of this year.
Guys the deal is being drafted now #OPEC #OOTT
1.59pm GMT
This story may not be over.... the chatter in Vienna is that Iraq is still disputing its oil production figures.
#gulf #OPEC delegate tells @energyintel that #Iraq is fighting over its production numbers #OOTT
1.53pm GMT
There are rumours that any Opec deal might also be dependent on non-Opec members, ie Russia, also cutting output.
Neil Wilson of ETX Capital explains:
The latest we’re hearing is that a deal has been done on the numbers and discussions are now underway on the monitoring committee. However in the latest twist, it looks like any cut will be dependent on non-OPEC members agreeing to limit output. Therefore getting this deal done may be down to Russia in the end – there is still potential for an agreement to come unstuck. Russia seems to be considering a 200k a day cut and OPEC wants 600k a day less from non-members.
Monitoring will be crucial to ensure that members of the cartel are not pumping more than they claim to be. The problem for OPEC is that it’s virtually impossible to track all the shipments reliably, so this will be a key detail.
1.45pm GMT
ABN Amro’s Hans van Cleef nails it:
Rumours suggest that OPEC will agree a 1.2 mb/d cut. However, that was already announced in Sept! It is about the details, who will do what?
1.40pm GMT
Bloomberg’s Javier Blas is pretty excited that Opec has (apparently) agreed to cut production by 1.2m barrels per day:
BOOM!!!! #OPEC deal -- more on @TheTerminal #OOTT pic.twitter.com/o8DjHmE5L0
The devil will be in the detail as ever with Opec #oott
1.33pm GMT
NEWSFLASH: Reporters in Vienna are snapping that Opec has reached a deal!
Reuters are quoting one delegate, who says ministers have managed to finalise the draft plan made in September in Algiers.
OPEC SOURCE SAYS OPEC AGREES ON ALGIERS PLAN TO CUT OIL OUTPUT - RTRS. Brent up 8% now at $50 a barrel
12.57pm GMT
Opec are due to hold a press conference at 4pm Vienna time, or 3pm GMT. So we should learn then if a deal has been reached, and whose agreed to cut oil production.
Fawad Razaqzada, market analyst at Forex.com, reckons the oil price could shed some of today’s surge once the details emerge:
The only thing speculators are not too sure about yet is the detail of the deal: who will cut oil production and by how much, and who will freeze and at what levels?
But with oil prices having already gone up so much and still rising, I wouldn’t be surprised if prices then start to ease back a tad in a typical “buy the rumour, sell the news” reaction. However, the potential selling pressure will likely be mild, unless of course the negotiations break down. But it is also possible that the deal to limit oil production will not be bold enough.
Opec’s supply deal talks — 5 things to watch https://t.co/kmrvoaKjyS pic.twitter.com/g9FGNEF8RZ
12.41pm GMT
Shares in oil companies are rocketing higher too.
Royal Dutch Shell are leading the FTSE 100 risers, up 4.75%, while BP gained 3.7%.
Brent #Oil jumps >8%, tops $50/bbl on prospect for Opec output cut. pic.twitter.com/2pXVVgHsTz
12.26pm GMT
Brent crude has now bursted up through $50 per barrel, following those reports that Opec might agree to cut production by 1.4 million barrels per day.
LATEST: Brent crude soars past $50 - it's up 8% today because of OPEC optimism https://t.co/Bl0M4PAm0Q pic.twitter.com/dX39NQQeT1
12.09pm GMT
11.55am GMT
Bloomberg’s chief energy correspondent , Javier Blas, can see an Opec deal coming together....
The pieces are slowly falling in place: #SaudiArabia said to acept #Iran at about 3.9m bd within #OPEC deal -- more on @TheTerminal #OOTT pic.twitter.com/72OZiwX64B
there's going to be almighty crash if #OPEC doesn't deliver now - Nymex crude up 7% near $49
11.52am GMT
UBS’s banking analyst Jason Napier predicts that Royal Bank of Scotland will take fresh cost cutting measures in 2017, having failed today’s UK stress tests.
He tells clients that:
We expect a bigger cost and restructuring plan in February – with associated capital costs – and colour around noncore, low return assets within the Commercial Bank, including £8.5bn in risk-weighted assets.
With uncertainty around timing and cost of the Williams & Glyn branch sale and the US Department of Justice probe into its residential mortgage-backed securities cases, we think RBS remains under pressure to deliver on core profits, principally by achieving further significant cost cuts.
11.29am GMT
Here’s a nice chart, showing how the oil price has languished behind other commodities for months:
oil vs metals, catch 'em up pic.twitter.com/Ty5lqHrDuF
11.27am GMT
Oil is surging even higher now, after Saudi Arabia said it could take a ‘big hit’ to get a deal at today’s Opec meeting.
Brent crude has spiked by over 7% to almost $50 per barrel, as traders anticipate that the oil cartel will hammer out production curbs in Vienna today.
Brent oil +7% to $49.75/barrel after source tells Reuters OPEC debate to focus on bigger than expected output cut of 1.4 mln bpd. pic.twitter.com/8lQxz1TSX9
Falih said OPEC was focusing on reducing output to a ceiling of 32.5 million barrels per day, or cutting by more than1 million bpd, and hoped Russia and other non-OPEC members would contribute a cut of another 0.6 million bpd.
“It will mean that we (Saudi) take a big cut and a big hit from our current production and from our forecast for 2017. So we will not do it unless we make sure that there is consensus and an agreement to meet all of the principles,” Falih said.
10.51am GMT
In other news, inflation across the euro area has inched up to its highest level since April 2014.
Consumer prices rose by an annual rate of 0.6% in November, says statistics body Eurostat.
#Eurozone inflation up to 0.6% in November: @EU_Eurostat flash estimate https://t.co/owlEvj0Zbb #euro pic.twitter.com/XmLDZe3SF2
10.30am GMT
Santander UK’s chief financial officer, Antonio Roman, says his bank is pleased to have passed this year’s stress tests:
They reflect the resilience of our business model and the strength of our balance sheet. We are well positioned to build on this strength in 2017.”
10.29am GMT
Some more photos from the Opec meeting:
Iraq's oil minister Jabar al-Luebi says willing to cut in "country's interests". #OPEC #OOTT pic.twitter.com/C2kgaHjfLA
Saudi oil minister Khalid al-Falih says kingdom would have to take a "big hit" to cut production at #OPEC. #OOTT pic.twitter.com/MtzVnExG09
10.01am GMT
There’s also drama in Vienna, as some Opec oil ministers suddenly express real confidence that the cartel will reach an agreement to cut production today.
Saudi oil minister Khalid al-Falih says kingdom would have to take a "big hit" to cut production at #OPEC. #OOTT pic.twitter.com/MtzVnExG09
Saudi oil minister Falih said ""we need to make sure Opec is in one line...we are close" to a deal. "Hoping we do this today" #OPEC #OOTT
*THERE WILL BE NO OUTPUT REDUCTION OR FREEZE FOR IRAN: MINISTER
*OPEC IS CLOSE TO A DEAL, IRAN WON'T FREEZE OUTPUT: ZANGANEH
9.38am GMT
Mark Carney managed to fire a double-barrelled Brexit warning this morning, urging Westminster and Brussels to avoid the dangers of a badly planned exit.
“The U.K. is effectively the investment banker for Europe.
“These activities are crucial for firms in the European Union economy, and it’s absolutely in the interest of the European Union that there is an orderly transition and that there’s continual access to those services.”
Carney returns Draghi's @Brexit warning with one of his own: https://t.co/a02AArvcjU
“It is preferable that firms know as much as possible about the desired endpoint, what type of relationship would be there, and as much as possible, as early as possible, about the potential path to that endpoint.”
“There is this possibility that the slowdown in the growth in world trade, which we have seen over the past few years, accelerates because of discrete policy initiatives potentially from the world’s largest economy.
“While that might not directly affect the United Kingdom, if it slows the pace of global growth - and we’re an open trading nation, one of the most open nations in the world - it’s going to have a knock-on effect through this economy.”
“Its challenge is that it still has legacy issues.... There’s misconduct costs, there’s impaired assets,they’re still working through the so-called non-core assets on which they have made progress.”
“They have made progress over the course of the year, they have identified and made an announcement today about additional actions they will be taking.”
9.10am GMT
Edward Chan, banking partner at global law firm Linklaters, says today’s stress tests miss one of the biggest threats to the UK financial sector -- Brexit.
“This year’s Bank of England stress test scenarios were drawn up in March; while the adverse scenario incorporates a global growth downturn, capital flows to safe havens and a depreciation of emerging market currencies against the dollar, it does not model the impact of the uncertainty resulting from Brexit negotiations nor the consequences of the actual exit from the EU.
It will be interesting to see how the adverse scenario is modelled in next year’s stress test given the Bank of England cautious response post Brexit.
Three banks failed the test for different reasons. RBS failed the test, Barclays received a light fail and Standard Chartered got a qualitative fail.
As has been the case in the US with the Fed, the Bank of England is tightening its stance on stress test capital requirements, making them more binding for banks.
The institute has not made any meaningful headway in relation to all challenges it is facing such as the sale of mortgage-backed securities over in the US [where it could be fined by the DoJ]
There is still no buyer for its Williams and Glyn unit.
8.44am GMT
Over in the City, shares in Royal Bank of Scotland have fallen by 2.7% at the start of trading following the news that it must strengthen its capital position.
They’re down 5.3p at 191p -- a long way away from 502p, which is the break-even point for the taxpayer to recover the huge bailout of 2008.
RBS, Barclays & SC shares open down this morning. But not massively (RBS: -2%). Stress test results not far off market expectations
RBS’s initial outline includes reducing costs (probably more job losses), reducing risk-weighted assets across the bank, and further asset disposals.
RBS wasn’t the only bank that came in for criticism from the report; Barclays and Standard Chartered were also mentioned. Barclays was cited for its systemic risks, and Standard Chartered missed its tier one capital requirement, but both banks do not need to submit revised capital plans to the BOE. This is good news for Standard Chartered, as there had been some concern for the bank ahead of the publishing of this report due to its exposure to emerging markets and commodities.
8.32am GMT
Finally, Carney says there is still “quite good momentum” in the drive to create better global financial regulation.
The key, he says, is to create cross-border partnerships (to avoid a repeat of the 2008 financial crisis).
8.28am GMT
Q: How frustrated are you that Royal Bank of Scotland failed this year’s stress tests?
RBS has made a lot of progress in recent years, says Carney, especially around its core business -- to serve UK small businesses and households. However, it still has legacy issues to deal with.
It lost its way over a number of years and did a number of other things...not particularly well.
8.20am GMT
Q: How concerned is the Bank of England about Italy (which holds a constitutional referendum on Sunday)?
Not very, it seems. Carney says that the UK has very little exposure to Italian banks directly.
8.16am GMT
Q: Investment banks need two years to organise an exit from the UK, so are you hoping that Theresa May will give them more clarity on her plans when she triggers Article 50?
Carney disputes the figure, saying that the BoE thinks banks would need less time (on average).
Nothing is agreed until everything is agreed, and everything isn’t agreed until the last minute.
Carney says the average City bank will need less than 2yrs to prepare for Brexit, which clashes with the 3 - 7 yrs you hear when firms lobby
8.12am GMT
Another question about the next US president.
Q: Is Donald Trump’s plan to roll back financial regulation a threat to financial stability?
8.09am GMT
Our City editor Jill Treanor asks whether the BoE is getting more concerned about the buy-to-let market.
Deputy governor Sir Jon Cunliffe says that buy-to-let market seems to be subdued, but there are not signs that landlords are putting more properties on the market.
8.01am GMT
Q: How worried are you about President Trump enacting some of his policies on global trade?
Carney says there is a risk that the existing slowdown in trade accelerates, because of “discrete policy initiatives from the world’s largest economy”.
8.00am GMT
Carney is then asked about household debt levels (yesterday we learned that consumer credit is growing at the fastest pace in 11 years).
He says that household debt position has improved, but is still high.
The good thing is that households and businesses, young people starting out in their first homes, can get credit at affordable terms.
Mark Carney says "thanks" to a question about household debt which means of course the opposite! #BoE
7.54am GMT
Q: Would the Bank of England be less concerned about the financial stability implications posed by the US economy if Hillary Clinton had won the US election?
We’ll never know, so it’s impossible to speculate, smiles Carney.
7.49am GMT
Onto Questions....
Sam Coates of The Times takes the new ball, and asks Carney to clarify his comments about needing an ‘orderly’ Brexit process.
It is preferable that firms know as much as possible about the desired endpoint, and as early as possible about the potential path about that endpoint.
The United Kingdom is effectively the investment banker for Europe.
Carney: The U.K. is effectively the investment banker for Europe.
7.43am GMT
Today’s tests have shown that Britain’s banking sector is well-capitalised, and in a good position to keep lending to homes and businesses, Carney insists.
Although today’s tests showed some capital inadequacies (at RBS, Barclays, and Standard Chartered), “the bottom line.... is that each bank now has the necessary plans to buid their resilience further”
The UK financial system has shown its ability to dampen, not amplify, a series of shocks.
7.38am GMT
Governor Mark Carney begins by saying that Britain’s financial system has “stood up well” to turbulence this year, such as the reaction to Britain’s EU vote.
Carney says the most significant risks to stability are global. He singles out China, where growth is increasingly reliant on borrowing. Capital outflows from China could accelerate, he warns, as the US raises interest rates.
7.34am GMT
The Bank of England is holding a press conference now to explain its bank stress tests, and its latest financial stability report.
You can see it live here.
7.28am GMT
Standard Chartered has issued a statement, confirming that it only passed today’s stress tests because it has already raised fresh capital this year.
The Prudential Regulation Authority Board concluded that the Group did not meet its Tier 1 risk-weighted capital requirement including Pillar 2A but determined that in light of the steps the Group has subsequently taken to strengthen its capital position it does not require it to submit a revised capital plan.
The scenario for the Stress Test was severe for the Group’s business operations as it includes a synchronised global downturn with particularly severe impact on Asia, as well as a generalised downturn in emerging market economies.
7.22am GMT
Royal Bank of Scotland has issued a statement to the City, confirming that it has agreed a revised capital plan to tackle the shortcomings uncovered by the BoE.
“We are committed to creating a stronger, simpler and safer bank for our customers and shareholders.
We have taken further important steps in 2016 to enhance our capital strength, but we recognise that we have more to do to restore the bank’s stress resilience including resolving outstanding legacy issue.
7.17am GMT
Today’s stress tests are the toughest ones ever set by the Bank of England.
As this chart shows, it is roughly equivalent to the slump experienced during the financial crisis, albeit with a shallower fall in domestic output, and a more severe rise in unemployment and fall in residential property prices
Here's the scenario the @bankofengland put banks through for its stress tests. Not far off the 2008 crisis pic.twitter.com/FTzlzTvwkd
7.14am GMT
You can see the whole report here:
Stress testing the UK banking system: 2016 results
We've just published our latest #FinancialStabilityReport and the results of our annual bank stress testing. https://t.co/xrgkXDPtjk pic.twitter.com/pqJfjwzu41
7.14am GMT
Here’s the official verdict from the Bank of England’s Prudential Regulation Authority, explaining how RBS doesn’t hold enough capital to cope with a big financial crisis:
7.06am GMT
My colleague Jill Treanor is at the Bank of England, and reports that RBS has already announced how it will react to failing today’s stress tests.
Royal Bank of Scotland has emerged as the biggest failure in the Bank of England’s annual health check of the banking system.
The 73% taxpayer owned bank has issued a plan to Threadneedle Street over night intended to bolster its financial strength by an estimated £2bn.
RBS says to "execute an array of capital management actions" as a result of the stress tests
7.05am GMT
Here we go!
Royal Bank of Scotland, the lender bailed out by the taxpayer in 2008, has failed today’s stress tests!
RBS biggest loser and will take action to bolster its financial strength
RBS, Barclays and Standard Chartered found to have struggled in Bank of England stress test
Three UK banks (RBS, Barclays & Standard Chartered) found not to have enough capital to withstand @bankofengland stress tests
6.56am GMT
Good morning. We’ve got two big events on the agenda today.
The Bank of England is releasing its stress tests of the British banking sector, showing how UK’s lenders could cope with a serious economic downturn.
The Bank has set out an imaginary five-year period in which there is a “synchronised global downturn” under which the global economy contracts by 1.9% – as it did during the financial crisis.
It has also incorporated domestic factors: a 31% fall in house prices, 42% reduction in commercial property prices with the economy contracting by 4.3% and unemployment rising by 4.5 percentage points. The dollar rises against emerging market currencies and the oil price troughs at $20 per barrel.
Related: Bank of England to reveal stress test results for UK's biggest banks
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