The Royal Bank of Scotland Group could face a loss of £170m after the collapse of Spanish housebuilder Rivero y Soler.
The Telegraph reports the company has filed for one of the largest bankruptcies in Spanish history with debts of €1.6bn.
RBS is one of Rivero y Soler’s largest lenders.
The filing for bankruptcy follows a failure by two subsidiaries, Alteco and MAG Import, to refinance an outstanding loan.
The Telegraph says RBS is unlikely to have to write-off the entire loan and the state-backed lender has already made substantial provisions for new losses.