A good read which details all the main balance sheet issues for UK and, by implication, international banks: Bank of England Financial Stability Report June 2012:
The outlook for financial stability has deteriorated. Stresses have persisted due to increasing concerns about sovereign debt sustainability, banking sector resilience and imbalances across the euro area. Past efforts by UK banks to build resilience through higher capital levels and stronger funding structures have provided some insulation from strains in the euro area. And higher liquid asset buffers provide significant protection against potential future funding strains. But progress in building capital has slowed recently and, despite a continuing reduction of structural funding vulnerabilities, UK banks’ funding costs remain high, partly due to investors’ concerns about potential future losses. The pass-through of higher funding costs to lending rates could lead to a further tightening of credit conditions, exacerbating a potential adverse feedback loop were the economy to weaken and the quality of bank assets to deteriorate. Various policy measures have been announced aimed at reversing this process, notably the ‘funding for lending’ scheme.