Last week, the Treasury revealed a breakdown of the £282bn of asset that Royal Bank of Scotland will ringfence through the Asset Protection Scheme.
As far as property goes, the extent of the loans that RBS will put into the scheme paints a shocking picture of the extent of the problems within its loan book.
It is putting £69bn of property loans into the scheme, which equates to more than three quarters of its £91bn property loan book. And as the Treasury stated in its 100-page analysis of the RBS assets, all of the property loans going into the scheme have either defaulted already, are in the middle of a restructuring process to avoid a default, or are on its high-risk "watchlist".
Of this £69bn of loans, £32bn are secured against UK property, and £13bn are secured against European property. But perhaps the most interesting bundle is the £24bn which were underwritten bt RBS's Global Banking and Markets (GBM) division.
These loans tended to be the largest and most complicated written by the bank, were often securitised (or supposed to be securitised and never made it out of the blocks), and secured against properties or leant to property companies across the globe.
Now the Treasury pointed out that £14bn of the GBM loan book that is going into the APS is due to mature next year. Not a problem, you may think, the point of the APS is to allow the bank to manage its loan book in a sensible way, and it can simply extend these loans for a few years and run the book down gradually.
However, the property loan book within GBM has been demmed 'non-core' by RBS, with the intention of running it down completely over three-to-five years. The bank has stated that it plans to do this by choosing not to refinance loans when they come due. So it is a fair assumption that a lot of the borrowers within that £14bn will next year be asking other banks to refinance large, complicated loans that are probably under water.
Even if the current market recovery continues, that is not a likely prospect. This could be one of the first places where we find out what happens when the unstopable force meets the immovable object.