Business News Roundup: HSBC Holdings, house price growth, Eurozone bad-debt growth.

UK banks continue to lose ground in terms of international strength and stature.

Against a backcloth of surging competition from Chinese banks, the report shows HSBC Holdings plc (LON:HSBA) is the only one of Britain’s four major banking players to remain in the world’s top ten based on the capital reserves they have to back their loans, known as tier 1 capital.

The survey from The Banker magazine, widely regarded as the industry bible, reveals that Royal Bank of Scotland has fallen from tenth to 12th place in terms of capital strength, displaced by Agricultural Bank of China, one of four Chinese banks now in the top ten, writes The Scotsman.

House price growth halts

House price growth ground to a halt in June after three consecutive months of price rises, according to Hometrack, the property market analyst. The strength of the London market helped the UK as a whole to avoid house price falls, according to the monthly survey of estate agents and surveyors, but Hometrack warned that lower demand over the summer would put further pressure on property values.

The percentage of postcodes recording monthly house price falls in June — 23.4% — was more than double the 10.8% that reported price increases. New buyer registrations fell by 0.5% in June — the first monthly decline in five months.

Hometrack said that economic uncertainty stemming from the Eurozone crisis and the start of the seasonal summer slowdown were to blame for low demand, while the Jubilee bank holiday was also a contributing factor, The Times says.

Eurozone 'bad debt'

Bad debts in the Eurozone are a “ticking time bomb” for the continent’s economy, with the worst effects expected to be felt next year, a report has warned. Banks’ balance sheets will contract by a record margin in 2012, further constraining the supply of credit to businesses and consumers, according to Ernst & Young, but the “real impact” of Europe’s debt crisis will not arrive until 2013.

The accountancy firm said banks will shrink their balance sheets by €1.6tn (£1.3tn) this year as the result of asset disposals and a contraction in their lending activity – a sharper decline than during the financial ¬crisis.

As a result, it predicted that corporate lending will contract by 4.8% in 2012, while consumer loans will fall by 6.6%, which would represent the fastest pace of lending contraction on record for the Eurozone.

However, next year looks even more “bleak” as the fallout from bad debts is felt across Europe, Ernst & Young’s Eurozone Financial Services Forecast said.