Royal Bank of Scotland fails stress test

The Royal Bank of Scotland says it will cut costs and shed additional risky investments after failing the Bank of England's latest stress test, designed to find out whether lenders could survive another financial crisis.

RBS, which is 73 percent-owned by the government, was the worst performer among seven major U.K. banks.

The central bank says the tests also found weaknesses at Barclays and Standard Chartered based on their balance sheets at the end of last year, but no further action was needed because both have announced plans to increase capital to required levels.

RBS says it has already taken steps to improve its finances, including raising 2 billion pounds ($2.5 billion) from investors. It agreed to take further action to cut costs and reduce risky assets.