Close Brothers predict round two of bank bailouts

Britain’s banks could be forced into a second round of government bail outs as they are set collectively to lose up to £70 billion on loans they made on commercial property, according to reports out on Monday.

Investment bank Close Brothers (LON:CBG) have predicted that commercial property may fall sharply between 50 percent and 60 percent by the end of 2009 compared to its peak in 2007.

With many property commercial property experts reporting drops already this year of around 30 percent, leaving 2009 falls to be around 20 percent to 30 percent.

As UK banks advance up to 95 percent of a property value to private investors it leaves them wide open to the collapse in commercial property value.

The report by Close Brothers highlighted that the UKs leading banks together have an estimated £250 billion exposure to commercial property loans, this is double the exposure they had before the recession in the early 1990s.

Source: UKPress

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