The boss of Royal Bank of Scotland says the bank will attempt to support the borrowers of billions of pounds of distressed commercial property loans rather than call in debts and spark a fire sale of assets.

The comments from Stephen Hester, the chief executive, provide a boost to the troubled property market, which feared that a wave of distressed assets could drive property values far beyond the 45% decline in values already endured since summer 2007.

British banks have lent £225bn to commercial property, with £105bn due to be refinanced in the next three years, and Mr Hester admitted that RBS has not yet taken enough of a writedown on property. However, speaking at the British Property Federation’s annual conference, he said it 'wouldn’t be smart' for RBS to call in the loans and crystallise the losses.

Daily Telegraph