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The new boss of Royal Bank of Scotland (RBS), Stephen Hester, has said that banks lent too much money to buy residential and commercial property, but that RBS would allow commercial and residential property owners the time they need to manage their debts. 

Speaking at the British Property Federation annual conference in London, Mr Hester said: "Courtesy of government support we have got the time to allow our customers to restructure themselves in an orderly way.  Instead of vast amounts of cheap repossessed property this will be a long term recovery allowing things to be rebalanced."

The new Chief Executive of RBS, Mr Hester pointed out that property rose from 18 per cent of bank lending to 40 per cent of lending ten years later and said that banks have to reduce property lending as a proportion of their total lending.  But, he said, that process will take years.

As to RBS itself, he appeared almost upbeat, saying: "We are not yet going up but the pace of decline has moderated substantially.  The point when banks were toppling over has passed. They can now play their normal role. The banking system does have adequate wherewithall to provide for UK borrowing. We don't want an artificial withdrawal of credit as is happening at the moment, but this will pass".