By James Salmon
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British taxpayers are on the hook for up to £90billion in loans to troubled eurozone countries through state-backed Royal Bank of Scotland and Lloyds.
The figures mean Britons will be closely watching Spain, which last night played down reports that it would seek a bailout for its ailing banks this weekend.
The five main UK high street banks have £160billion tied up in loans, mortgages and government debt in troubled European countries including Portugal, Italy, Ireland, Greece and Spain.
Exposed: RBS and Lloyds are already sitting on a combined loss of almost £40bn
More than half of this exposure comes from RBS and Lloyds, which were bailed out with £65.5billion of taxpayers’ money at the height of the financial crash in 2008.
Latest figures show RBS is the most vulnerable to the crisis with £64.4billion in the so-called PIIGS countries, including £42.3billion in the bailed-out Irish economy and £14.6billion in Spain. This represents almost 5 per cent of its total assets, more than any of the other high street rivals.
It has already made provisions of £7billion on its Irish loans â€" meaning it does not expect them to be repaid.
Lloyds is exposed by £23billion, including £14.9billion lent to Irish customers by its subsidiary HBOS at the height of its lending spree.
Barclays has an exposure of £64.6billion, including £25.7billion â€" more than any other UK bank â€" in Spain. These three are expected to see their credit rating slashed later this month by Moody’s over concerns that the escalating crisis in the eurozone, spurred by growing fears of a Spanish bail-out and a Greek exit from the euro, could cause these loans to quickly turn sour.
The fortunes of RBS and Lloyds are of concern to UK households across the UK as taxpayers are already sitting on a combined loss of almost £40bn as the banks’ share prices have plunged.
Banks have been busy cutting their eurozone exposures, shoring up their finances and building up their capital reserves.
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