Co-Operative Bank failed the Bank of England's first public stress test of the country's lenders as Royal Bank of Scotland Group and Lloyds Banking Group barely passed. Co-Operative Bank said it planned to cut a further £5.5 billion (HK$66.9 billion) of assets by 2018, while RBS plans to sell £2 billion of notes to bolster capital. None of the banks said it would have to sell new stock. The regulator, which assumed the role of British bank supervisor last year, is following its US and European counterparts in using a stress test to try to revive investor confidence in lenders. Six years after the financial crisis, shares of four of Britain's five largest banks trade for less than their book value - or total assets. "This was a demanding test," Bank of England governor Mark Carney said. "The results show 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." Britain's eight biggest banks were probed on their resilience to shocks including a jump in the jobless rate to 12 per cent, a rise in the central bank's benchmark interest rate to 4 per cent and house prices falling by a third. The stress test reduced RBS' core capital ratio to 4.6 per cent, based on data at the end of 2013, just above the 4.5 per cent pass threshold. Capital at Lloyds came in at 5 per cent, while Co-Operative Bank failed the assessment, ending up at minus 2.6 per cent. "The market wasn't expecting any other bank to fail, so this shouldn't have a big impact on share prices today," said Gary Greenwood, an analyst at Shore Capital Group. The central bank said both Lloyds and RBS took actions this year to address the shortage of capital and did not have to submit new plans to bolster resilience. In contrast, Co-Operative Bank was required to submit a new plan to shrink its balance sheet, which was accepted by the Prudential Regulation Authority. Co-Operative Bank, which had signalled earlier this month it would flunk the test, said it would try to cut residential mortgage assets and did not expect to be profitable before 2017. RBS said it would continue to shrink assets and sell its Citizen Financial Group operation in the United States. The bank plans to issue about £2 billion of additional tier one capital instruments with a trigger ratio of 7 per cent. All other banks passed, with HSBC Holdings getting the highest core capital ratio, at 8.7 per cent in the assessment. Barclays ended the test with 7 per cent, Santander UK and Standard Chartered had 7.6 per cent and 7.1 per cent, respectively. Nationwide Building Society had 6.1 per cent. The test of banks was published alongside the Bank of England's semi-annual Financial Stability Report, which provides an overview of the strength of the financial system. In the report, the central bank said the global economic outlook had weakened since June and concerns about geopolitical risk had increased. It said these could undermine financial stability if a "shift in global risk appetite triggers sharp adjustments in financial markets and undermines business and household confidence". The Bank of England also highlighted a risk to stability from the drop in oil prices this year. While the decline did not pose an immediate threat, it could affect the ability of some companies, such as US shale oil and gas exploration firms, to service their debt and "could affect market sentiment more broadly", it said.