Banks short of £38bn, say analysts
BRITAIN'S banks are facing a capital shortfall of £38billion, experts said yesterday.
JP Morgan analysts issued the warning as the banking sector braced itself for tougher regulation, potentially including new rules on the size of their reserves.
The analysts estimate the “unattractive” merger of Lloyds TSB and HBOS is short of £16billion, Royal Bank of Scotland £12billion and Barclays £10billion.
JP Morgan said the biggest risk to earnings and capital came from corporate lending, not mortgages and house prices.
It said banks would scrap dividends and sell assets to raise cash
.
Cazenove analysts said British banks would benefit from the US Treasury’s $700billion (£380billion) bail-out plan, which would help them finally draw a line under their US credit-crunch writedowns.
The scheme will let banks sell their toxic assets to the US authorities.
Cazenove said Royal Bank of Scotland had the biggest exposure, with £18billion. Barclays’ is £15billion and HBOS’s £9billion.
Actual losses could be smaller because many of the assets will be of reasonable quality.
