As of: March 6, 2024, 7:43 a.m
By: Max Schäfer
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In connection with the crisis on the real estate market, Deutsche Pfandbriefbank is coming under pressure.
(Archive photo) © Andreas Gebert/dpa
The global real estate market is coming under increasing pressure.
This crisis is now putting a German bank in distress.
It's just above junk level.
Munich - China's real estate industry experienced another setback last week: The real estate group Country Garden announced on Wednesday, February 28th that it would have to defend itself against an application for winding up in a Hong Kong court.
It's a loan worth 1.6 billion Hong Kong dollars, about 188.6 million euros.
After Evergrande, Country Garden is the next major Chinese real estate group to come under pressure in the wake of the real estate crisis.
However, the Asian country is not the only trouble spot.
The industry is also under pressure in the USA - with consequences for German banks.
The global real estate crisis is also causing a German bank to stumble
The rating agencies Standard & Poors and Fitch have now revised down the ratings of two German banks.
The Deutsche Pfandbriefbank and Aareal Bank are affected.
Both banks are relatively heavily involved in the US commercial real estate market.
However, the properties are falling in price.
The reason is the change in the world of work.
The trend towards home offices means that more and more offices are empty;
and the need decreases.
According to estimates, according to NZZ,
around 20 percent of office space in US cities
remains unused.
At the same time, the refinancing costs for real estate loans are rising due to the sharp increases in key interest rates by the ECB and the US Federal Reserve.
Deutsche Pfandbriefbank is on the verge of junk status – due to its exposure to American real estate
Deutsche Pfandbriefbank has 4.9 billion euros in loans outstanding for commercial real estate in the American market.
According to the NZZ,
this corresponds
to almost 15 percent of the loan portfolio.
Offices account for 80 percent.
In view of this, the rating agency Standard & Poors has now given the Pfandbrief bank the final rating above the colloquial junk level.
The share price also fell by 61.5 percent within a year; from February to March the share recorded a loss of around 30 percent.
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According to a report by Focus
, Aareal Bank was also
downgraded.
The bank, based in Wiesbaden, has granted loans worth 8.6 billion euros on the US market.
Half of this is allocated to finance office properties.
Nevertheless, the rating agencies are more optimistic about Aareal Bank.
According to Focus
, Fitch
assumes that the bank's operating profits form a sufficient buffer for greater risk provisioning.
According to NZZ
, Deutsche Bank has
granted loans worth 17 billion euros in the American commercial real estate market, of which 7 billion are for offices.
However, the amount is relatively small.
It only accounts for 3.5 percent of the bank's total loan book of 480 billion euros.
The European real estate market can also become a risk for German banks
However, it is not just the American and Chinese markets that pose a risk for German banks. The situation on the German real estate market looks similarly difficult.
Prices have fallen sharply over the past 15 months while refinancing loans has become more expensive.
The Swiss bank UBS also considers the real estate markets in Munich and Frankfurt to be risky.
In the “Global Real Estate Bubble Index,” the bank collects cities where prices have risen to such an extent that they are far removed from the actual value of the real estate.
German economists believe banks are prepared for the real estate crisis
German economists therefore warn.
“Memories are brought back to the global financial crisis from 2007, when massive defaults on real estate loans in the USA brought the global financial system to the brink of collapse,” explained Volker Brühl, managing director of the Center for Financial Studies and professor at Goethe University Frankfurt, according to
Focus
.
At the same time, however, Brühl points out that banks today have more equity and liquidity and are therefore more crisis-proof than in 2007.
He therefore believes fears of another major crisis are unfounded.
Klaus-Jürgen Gern from the Institute for the World Economy in Kiel assessed the effects of the Chinese real estate crisis in a similar way: “We probably don't have to fear something like the global financial crisis, which also emerged from a real estate crisis, namely in the USA, because the financial ones China's connections with the rest of the world are very manageable." Nevertheless, he admitted to
ZDF
that the effects on the rest of the world are not yet entirely clear.
(ms)