Many British banks may need another state bailout next year and their borrowing requirements could hit £25 billion a month, the New Economics Foundation (NEF) thinktank said today.
The NEF said it had examined Bank of England data and concluded that many UK banks appeared to face a funding cliff, as the NEF published a report on the British banking system.
Royal Bank of Scotland and Lloyds had to be part-nationalised as they ran up huge losses during the credit crisis, and others such as Barclays and HSBC have benefited from cheap credit provided by the central bank.
UK banks have a January 2012 deadline to repay £185 billion they borrowed from the Bank of England against £287 billion of illiquid assets, mostly residential mortgage backed securities, under the BoE's Special Liquidity Scheme.
They also face further pressure from new Basel III banking industry rules, due to be phased in by January 2019, which will require banks to hold more capital.
The main requirement of the new Basel rules is for banks to have a minimum Tier 1 capital ratio of 7 percent. Many banks' Tier 1 ratios are already above this but the Basel III regime is much stricter on what can be counted as Tier 1 capital.
The heads of top British and French banks said last month said they could meet tighter capital rules without a rights issue by using cash generated by their own profits.
However, credit rating agency Standard & Poor's said in August that several UK banks were overly reliant on wholesale funding that is government guaranteed or central bank funded.
The NEF thinktank also backed separating companies' retail banking and investment banking operations - an option which the government's Independent Commission on Banking (ICB) is currently examining.
Reuters