There's a fascinating piece of research out from Capital Economics (not, alas, available online) that's attracting a good deal of comment. This article sums up the results, and the study's author talks about them to the FT here.

...it is unlikely that banks will raise all the capital they need to keep expanding their balance sheets at recent rates. As a result, they will have to rein in their lending. “If UK banks fail to raise any more capital than the £20bn ($37bn) raised so far, lending could contract by 7%... Even if lending to UK firms and households just bore its fair share of a 7% drop in bank assets, lending would fall by £60bn, equal to 5% of GDP."

Most attention is understandable on the macro implications - 50% drop in house prices and a contraction over 2009 - but the bank funding angle is also interesting. So far UK banks have raised £20 billion, and in order to avoid a borrowing crunch they'll need another £45 billion, or to sell off a considerable amount of assets (£450 billion worth) or to reduce lending by 7%. Or some combination of the three. Treasury offices face a very hard time.