RBS and Lloyds are ‘most exposed’ to UK commercial property market

Royal Bank of Scotland (RBS) and Lloyds Banking Group are the two major UK lenders most exposed to the commercial real estate market, which poses a risk for banks after asset managers froze withdrawals from property funds, according to analysts.

RBS has £25.2bn (€29.4bn) of lending to the sector, accounting for 66% of its tangible net asset value, a measure of capital, and Lloyds has £18.1bn, or about 46% percent of its TNAV, JP Morgan analyst Raul Sinha, an analyst, said in a research report.

While the risks for major banks are “manageable,” smal lenders could see greater losses because of higher loan-to-value ratios on their commercial real estate (CRE) debt.