Sept. 14 (Bloomberg) -- U.K. banks are less than half way through posting 240 billion pounds ($398 billion) of losses on loans and securities, a reflection of the country’s economic weakness, according to Moody’s Investors Service Ltd. British banks are likely to record 130 billion pounds of losses in the next 12 to 18 months, in addition to 110 billion pounds lost since the beginning of the credit crisis, Moody’s said today in a report. The company “expects the sustained weakness of the U.K. macroeconomic environment to feed through into higher loan arrears with ensuing pressure on profitability and capital,” it said. British taxpayers have provided about 1.4 trillion pounds of support to banks, becoming the biggest shareholder of Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc, while seeking to shore up capital eroded by writedowns. British banks have raised about 120 billion pounds of capital from the beginning of the credit crisis to mid-2009, Moody’s said. The company’s “base case scenario” anticipates a 40 percent peak-to-trough decline in British house prices and a 60 percent drop in commercial property, the report said. Banks face pressure on capital, along with depressed revenue and profitability, from the higher costs of attracting deposits and wholesale funding, Moody’s said. Further ratings downgrades are unlikely because the company has already incorporated risks, it added. Moody’s maintained its “negative” outlook for British banks. Government support has resulted in little change to senior debt and deposit ratings, which are expected to remain stable, Moody’s said.

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