Analysts predict that a 10% fall in house prices, could wipe 118 basis points, or 1.18% from Lloyds' tier one capital ratio. A 20% drop would cost the bank 242bps. To put these figures into perspective, after the MBNA deal, Lloyds' management believes the bank will have a tier one capital ratio of 13.5%, 0.5% above what it believes is adequate. A 20% fall in home prices, assuming all other factors remain equal, would erode capital buffers to around 11%, a level at which management would likely be forced to reconsider the dividend altogether.