Fixed Income
German Banks Start to Cut US Office Loan Exposure That Caused Bond Turmoil: Credit Weekly
- Value of all but the best offices has dropped by more than 75%
- Credit provisions rose 237% at bank formerly known as NYCB
The sales come as market participants expect the European Central Bank to press German banks to recognize higher losses on American assets.
Photographer: David Paul Morris/BloombergThis article is for subscribers only.
German banks are cutting legacy US office loan exposure after concerns about commercial real estate losses led to a plunge in bond and equity prices in February.
Deutsche Bank AG is close to selling about $1 billion of loans linked to CRE there and Deutsche Pfandbriefbank AG is cutting back on office and American loans after it set aside hundreds of millions of euros as a buffer against potential property losses. The lender recently agreed a potential advisory role for a Starwood Property Trust Inc. subsidary on some of its US CRE book.