U.S. Commercial Real Estate Next Big Risk
The Globe And Mail reports: This all spells looming trouble for banks. The banking industry, which has a $1.8-trillion exposure to commercial real estate, could face losses of nearly $200-billion, according to Mr. Parkus.
And unlike the housing meltdown, this crisis is likely to hit smaller banks the hardest. Mr. Parkus pointed out that the four largest U.S. banks have an average exposure of 2 per cent to commercial real estate. The 30 to 100 largest banks have an average 12-per-cent exposure.
“We see [commercial real estate] as a very significant risk,” acknowledged Jon Greenlee, the Fed's associate director of bank supervision and regulation.
He pointed out that the 19 large financial institutions that recently underwent stress tests had roughly $600-billion in commercial real estate loans. The total market is worth $3.5-trillion.
There were 5,315 U.S. commercial properties in default, foreclosure or bankruptcy at the end of June, more than twice the number at the end of 2008, with hotels and retail among the most “problematic,” Real Capital Analytics Inc. said in a report Thursday.
View the full article on The Globe And Mail: U.S. Commercial Real Estate Next Big Risk
Posted by: Mark Alferman