Commercial real estate is currently “among the biggest risks for the banking sector,” said EBA boss José Manuel Campa recently. New data shows the problem is increasing in Austria and Germany, while it is declining in negative leaders Spain and Italy.
Across Europe, the crisis on the commercial real estate market is reflected in higher risks and increases in loans at risk of default – including in Austria. According to data from the European Banking Authority (EBA), the volume of loans at risk of default in the commercial real estate sector at domestic banks increased to 3.2 billion euros in December 2023, from 2.3 billion euros in September.
The non-performing loan (NPL) ratio in the sector also increased from 3.4 percent to 4.6 percent. At the end of the fourth quarter, Austria was above the EU average of 4.3 percent. The neighboring country of Germany is also severely affected, where the volume of loans at risk of default for commercial real estate increased from 9.7 billion to 13.6 billion euros from the end of September to the end of December 2023. The “Handelsblatt” had previously reported on the data.
EBA on alert
Compared to the EU, Austria or Germany do not have the greatest risk of default on these loans. For example, the NPL ratios (as of December 2023) in Spain and Italy are much higher at 6.6 and 6.5 percent, respectively, but both countries show a declining trend in the ratios compared to September 2023.
The EBA has been on alert for some time due to the falling prices on the commercial real estate market and the resulting increasing risks in the banking sector. Because of low interest rates, billions have flowed into the industry for years, but with the sharp rise in interest rates and the trend towards home offices during the Corona pandemic, prices came under severe pressure. In Austria, the insolvencies in the Signa Group also caused turbulence.
Commercial real estate is currently “among the biggest risks for the banking sector,” said EBA boss José Manuel Campa recently to “Handelsblatt”. However, he does not fear systemic dangers for the entire banking system. (Apa)
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2024-04-07 15:27:36
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