Royal Bank of Scotland and Lloyds Banking Group are planning to take equity stakes worth millions of pounds in joint ventures with property companies on repossessed development projects and buildings in need of refurbishment.
The banks are understood to be in talks with landlords of office blocks, shops and warehouses about co-owning sites where the owners are in default on their loans, to avoid crystallising the billions of pounds of losses the banks would face if they were to sell the repossessed properties on the open market.
Helical Bar in conjunction with an American fund, is understood to be at the forefront of negotiations. Great Portland Estates, which is known to have a close relationship with these lenders, is another likely partner.
Both RBS and Lloyds have billions of pounds outstanding in commercial property loans. RBS has an estimated exposure worth more than £30bn, while Lloyds has an estimated £60bn outstanding, the bulk of which it inherited when it took over HBOS.