RBS and Lloyds could suffer more than £30bn of losses if property prices collapse - but will not need another state bailout

• e-mail

Britain's state-backed banks would suffer more than £30billion of losses in the event of a collapse in property prices, a Government stress-test of the UK banking system will show this week.

But the test will conclude that both RBS and Lloyds Banking Group would weather such a crisis without needing a fresh state bailout, according to analysis by investment bank JPMorgan.

The Bank of England tests will check that leading banks could cope with a 35 per cent drop in house prices and 30 per cent fall in commercial property values.

Stress tests: RBS and Lloyds Banking Group would weather a collapse in property prices

The Bank will say on Tuesday how weak the UK’s eight biggest banks and building societies would become in the event of three-year economic collapse.

In the hypothetical scenario, RBS’s and Lloyds’ capital would remain comfortably above a minimum threshold, JPMorgan estimates.