“The truth is that European banks are in a worse state than American banks, that they never really recapitalized even though they said they would,” Mr Brown said. “They didn’t write off their toxic assets. They’re not lending, and they’ve been trying to disguise the extent of the problems they face.”
The European banks just haven\’t been writing down their bonds to market (ie, likely default) values.
The UK banks have been, as we saw when RBS insisted that Greek bonds were on the books at 50% of par.
The effect of this is that as and when default does occur the UK banks have already taken the losses: the European ones not and so they will fall over and the UK ones not.