Banks could face billions of pounds-worth of further writedowns from investments backed by real estate as a result of exposures being the subject of a prolonged period of rating downgrades. This continued distress will leave banks further unable to sell or liquidate positions in a trend that is likely to continue over the coming 12 months.

According to ratings agencies and analysts, the worsening economic environment will mean that default figures are likely to rise, and recovery values on defaulted assets will plummet