Both Lloyds and RBS face running up more losses over the next three years, whilst Northern Rock has been downgraded by a ratings agency following its purchase by Virgin.
Standard & Poor’s downgrading has come partly because of Northern Rock’s ‘moderate’ likelihood of needing further taxpayer support.
Meanwhile, analysis by Barclays Capital says that taxpayer-backed Lloyds and RBS could be hit with £33bn of new losses, and face having to write down mortgages, other consumer loans and corporate debt.
The two lenders have already been hit by £100bn in impairments since being bailed out in 2008, but it now looks as though further pain is to come.
Lloyds could have to take a further £20bn of impairments against its credit portfolios, an amount equal to half of its core capital buffer, while RBS could be hit by new writedowns totalling £13bn.
Barclays Capital estimates Lloyds will have to mark down the value of its mortgage portfolio by £5bn over the next three years.
RBS faces a further £1bn of mortgage impairments. Barclays said that mortgages were the ‘key area of concern’.
RBS is 83% and Lloyds 41% owned by the taxpayer.
New losses raise the prospect of the requirement for fresh cash injections of capital into the struggling banks.
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