UK banks sitting on £40bn of undeclared losses

The UK’s major banks are sitting on £40bn of undeclared losses that are stopping them lending to businesses and households, a report has claimed.

According to the UK’s Daily Telegraph newspaper, shareholder adviser group PIRC analysed the 2011 accounts of the UK’s top five banks to see how much they expect to write off as bad debt in the coming years.

Royal Bank of Scotland (RBS) has about £18bn of undeclared losses that would use more than a third of its capital buffer and could force the state-backed lender to ask for another bailout.

HSBC has £10bn in undeclared losses, Barclays £6.7bn, Standard Chartered £3.6bn and Lloyds Banking Group £3.6bn.

The bad loans have yet to be taken against profits, and therefore cast a shadow which will weigh over all the banks for some time to come.

The report said none of the banks disputed the numbers.

PIRC said banks were delaying de-risking and de-levering balance sheets due to accounting practices.


This article was first published on IFAonline

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