It is a far cry from the depths of the last crisis, but the economic woes brought about by the coronavirus have caused impairments on bad loans to jump at the two largest lenders to UK commercial property.

Last week Lloyds Banking Group took a £1.4B provision against potential losses on bad loans when it reported first quarter 2020 results, and Royal Bank of Scotland took an £802M provision.

The provisions were not all directly related to commercial property, but a big chunk of it was related to losses on loans to tenants like retailers and restaurants, both banks said.

In the coming months, all eyes in the property world will be on the actions of banks like RBS and Lloyds, which will need to work with property owners to renegotiate loans: When tenants can’t pay landlords rent, then landlords in turn can’t pay interest on loans to banks.

Going into the last downturn, Lloyds and RBS lent more than £150B combined to commercial property, much of it at very high loan-to-value ratios. As a result they made a combined loss of £45B on those loans.

Coming into the coronavirus crisis they are not nearly as exposed to the sector. RBS’ Q1 results showed it had a commercial property loan book of about £39B. Lloyds did not provide a Q1 figure but at the end of 2019 its property loan book was £29B.

Lloyds pointed out in its results last week that its average LTV today is 47%, and 75% of its property loan book has an LTV of 60% or below.

But in their results, both banks indicated there will be more stress on commercial property lending as a result of the coronavirus pandemic.

“In the property sector, the widespread economic shutdown will impact the income streams of landlords as well as the progress of development projects,” RBS said. It outlined the breakdown of loans on which it anticipated it might make a loss, and commercial property was the largest single commercial sector, ahead of retail or leisure, with £591M of loans at risk.

Lloyds did not provide a detailed breakdown of where it expects to take loan losses. Lloyds said its base case was for commercial property values to fall 15% this year.

It did point out that less than 15% of its loan book is secured against retail real estate. In a report last week from Case Business School, academics predicted losses of £8B to £10B by banks on loans secured against retail assets.