Britain’s banks and building societies could absorb a 20% fall in UK house prices in a year without further denting their capital reserves, according to research by Moody’s, the credit ratings agency.

The study, to be published today, comes as shares in the UK’s largest lenders continued to slide yesterday, raising fresh concerns that the investment banks that have underwritten the rights issues for Royal Bank of Scotland and Bradford & Bingley would be left holding a substantial proportion of the new shares.

Shares in RBS yesterday slipped 2.6% to 231.75p – their lowest level for a decade, and closer to the 200p price at which banks and investors have underwritten the £12bn fundraising. Meanwhile, Bradford & Bingley’s shares dropped almost 7% to close at 90.5p – only 8.5p above the 82p underwriting price for its £300m rights issue.

Financial Times