dpa
Frankfurt
The majority of banks in Germany and Europe will be able to cope with the crisis in the office and real estate markets, coupled with a weakening economy, senior banking officials said at a conference in Frankfurt on Monday.
“We as supervisors do not need to be nervous. We have our instruments and have engaged with these risks at a very early stage. But we are very watchful,” Claudia Buch, head of banking supervision at the European Central Bank (ECB), told the conference organized by the Handelsblatt business daily.
Raimund Röseler, head of banking supervision at Germany’s Federal Financial Supervisory Authority (BaFin), added that there was concern on financing for commercial property. “But German banks are largely very well capitalized and will for that reason be able to survive strong headwinds, provided that risk management and governance are in order,” he added.
Due to the trend of working from home reducing the need for office space, the market for these properties is under pressure in many countries.
The collapse of Austrian property company Signa Holding in November has hit the German and Austrian commercial property market, with some banks increasing reserves to cope with any losses.
Both supervisors highlighted problems in the US commercial property market.
But Röseler noted that few German banks were engaged in that market.
“I do not have concerns overall,” he said.
But there were weaknesses in the German property market, with certain banks “very exposed,” he said. The impact could be seen in certain banks’ balance sheets, but only a few were giving rise to concern that their existence was in jeopardy.
Buch cautioned that the possible consequences for Europe of the US property crisis should not be underestimated.
“One cannot say that these markets are completely uncoupled from each other,” she said.
Local differences meant that the US trend would not cross the Atlantic in a one-to-one way, but past crises had shown that a repetition of developments there could not be ruled out, Buch said.
