Just when you thought it was all over, safe to go in the water etc, it looks like the banks are going to get hit all over again. Mrs. ReRisk has been predicting this for some time and it looks as if she is going to be vindicated.
From data compiled by DeMontfort[1] University, Savills estimate that there is £38bn of negative equity currently on investment properties but this might rise to £50bn once you factor in the drop in the underlying land values, or 25% of the entire lending book in round terms. Shopping centres are particularly badly affected, with as many as 1 in 5 capable right now of being put into receivership.
Accordingly, the banks are said to be doing what they can to keep the loans viable, even if it means only paying back the interest. The last thing they want is for the loans to materialize on their books.
But sooner or later, you have to guess that they will. One somehow doubts that anyone is squirrelling away the odd bonus payment to offset this.
Source: BBC News
[1] You will recall that Simon de Montfort, hunting down Cathar heretics in Beziers, famously ordered the wholesale slaughter of everyone in the town once he had broken in. Undismayed by the fact that not everyone was a Cathar, he simply said “Neca eos omnes. Deus suos agnoscet.” (Kill them all. God will know his own”). Could have been applied to bankers!
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