Five of the UK's major banks could turn to further real estate loan sales to plug a £27.1bn hole in their balance sheets.
The Prudential Regulation Authority, the UK banking regulator, has told banks that they must bring their capital adequacy ratios up to 7% in order to make up the shortfall.
Lloyds and RBS had gaps of £8.6bn and £13.6bn respectively, which must be addressed in order to bring their gearing down to levels deemed acceptable by the regulator, according to a report on the previously confidential details on banks' balance sheet shortfalls that the regulator is due to publish today.
The 7% target is based on the Basel III guidelines, which govern banks' capital and liquidity requirements. The PRA found that five out the UK's eight major banks (Barclays, Co-operative Bank, Lloyds Banking Group, Nationwide and RBS) fell short of the target. The banks will need to raise a total of £13.7bn between them in order to close the hole in their balance sheets.
However, RBS and Lloyds both said that they were on track to bring their capital adequacy ratio to 9% by the end of the year. Lloyds said that it would make up the shortfall through a mixture of growth in its core business and sales of non-core assets.
Barclays, which has a shortfall of £3bn, said that it was on track to meet the 7% target by the end of the year through the disposal of non-performing assets.