Around 43% of the real estate loans of UK financiers Lloyds Banking Group (LBG) and Royal Bank of Scotland (RBS) are in 'intensive care', an Investment Property Forum event has heard.

William Maunder Taylor, director at Kingfisher Property Finance in London, told the IPF meeting in Birmingham last week that the Lloyds Banking Group had 450 staff in what he described as its 'intensive care' unit for its property loan book.

Of the total of £56 bn (EUR 64 bn) in loans, Maunder Taylor said he believed that as much as £17.6 bn could be regarded as being in a critical condition.

'So far they have generated £4 bn in cash but it should be noted that 450 employees is as many as some FTSE 100 companies have.'

The Kingfisher Property finance director said that of RBS' £38 bn exposure, around £14 bn was being managed by its Restructuring Group. 'This means that 43% of LBG and RBS property loans are in intensive care,' he added.

Maunder Taylor said that those still lending were cherry picking experienced borrowers with good tenants and for these clients they 'are more prepared to go up the risk curve'.

He believed that 65% LTV should be regarded as the top end and that lenders' credit committees felt further falls were still to come. 'Basel III which will be phased in between 2013 and 2019 is affecting banks' attitudes already, and more demanding capital and liquidity regulations will restrict lending capacity for property,' he said.

Kultar Khangura, property group partner at Pinsent Masons which hosted the IPF event, said: 'It is clearly still a very difficult lending environment for both lenders and borrowers and sadly I fear that this is going to take a number of years before we see a much greater level of liquidity return to the market.'

Click on the link below to read: 'UK legacy loans could take 5 years to resolve, IPF told'