Banks are sitting on more than £100bn of paper losses from their exposure to UK commercial property - more than the combined market capitalisation of Royal Bank of Scotland, Lloyds and Barclays, according to global property consultant Jones Lang LaSalle.
The staggering figure represents a ticking time bomb for lenders, following a tough two-year spell for the real-estate market.
Office blocks, shops and industrial units are expected to halve in value by the end of this year from their 2007 peak.
Banks have shied away from crystallising losses on their commercial-property portfolios because the figures could bankrupt them.
Barry Osilaja, director at JLL’s corporate-finance division, said: 'Lenders cannot afford to own up to those losses now because it would break the banks.'