Britain's banks face up to £70bn of losses on commercial property loans, enough to force some of them into a further round of taxpayer bail-outs.
Investment bank Close Brothers forecasts massive write-downs in light of its forecast 50-60% slump in commercial property values by the end of 2009 compared to the market’s 2007 peak. Most property experts believe such values have already dropped 30% this year.
Such write-downs could again imperil banks’ capital ratios, potentially forcing them once more to go cap in hand to the Government.
UK banks are particularly exposed, having fuelled the commercial property sector boom by lending as much as 95% of a property’s value to private investors.