Britain’s Banks Black Hole In Billions

The ability of Britain’s banks to lend to businesses and households is being hampered by a £40bn black hole of undeclared losses.

After analysing the 2011 accounts to determine how much banks expect to write off as bad debt in the coming years without yet taking against profits, shareholder advisory group PIRC found RBS to be in the worst condition – with £18bn worth of undeclared losses.

RBS’s undeclared losses put them ahead of HSBC (£10bn), Barclays (£6.7bn), Standard Chartered (£3.6bn) and Lloyds Banking Group (£3.6bn), and would wipe out more than a third of its capital buffer – potentially forcing another taxpayer rescue.

Head of governance and financial analysis at PIRC, Tim Bush, said the undeclared losses meant that banks had not been clearing balance sheets of bad debts and releasing funds to businesses and households.

“The scandal is the fact that banks are delaying de-risking and de-gearing due to the accounting standards,” Bush said. “The funds are being tied up, rather than being put to work elsewhere.”