UK banks to post $215-bn losses, says Moody’s

UK banks are less than half way through posting £240 billion ($398 billion) of losses on loans and securities, a reflection of the country’s economic weakness, according to Moody’s Investors Service Ltd. British banks are likely to record £130 billion of losses in the next 12 to 18 months, in addition to £110 billion lost since the beginning of the credit crisis, Moody’s said in a report. The company “expects the sustained weakness of the UK macroeconomic environment to feed through into higher loan arrears with ensuing pressure on profitability and capital,” it said. British taxpayers have provided about £1.4 trillion of support to banks, becoming the biggest shareholder of Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc, while seeking to shore up capital eroded by writedowns. British banks have raised about 120 billion pounds of capital from the beginning of the credit crisis to mid-2009, Moody’s said. The company’s “base case scenario” anticipates a 40%peak-to-trough decline in British house prices and a 60% drop in commercial property, the report said. Banks face pressure on capital, along with depressed revenue and profitability, from the higher costs of attracting deposits and wholesale funding, Moody’s said.