Most European Banks Are Wary of Commercial Real Estate Lending

A large number of European banks is skeptical of commercial real estate next year, potentially worsening the fallout from a slump in the asset class, according to a top regulator.

A semi-annual survey by the European Banking Authority found that three-quarters of banks plan to decrease or keep their exposure to such borrowers at a constant level. More than 60% of responding banks also expect the quality of commercial real estate loans to deteriorate, the EBA said.

Commercial real estate has been one of the asset classes hit hardest by a rapid increase in interest rates as developers also ...