Bloomberg News

Delinquent Property Loans at European Banks Total $1 Trillion

February 27, 2012

Feb. 24 (Bloomberg) -- European banks hold about 750 billion euros ($1 trillion) of delinquent real-estate loans, putting them under pressure to sell assets, according to a study by the European Business School.

Divestments by the banks will create “attractive” opportunities for buyers of loans or properties, particularly residential and retail buildings outside of prime locations, the Oestrich-Winkel, Germany-based school said in a report presented at its annual property conference.

By 2014, the shortfall in debt funding for maturing loans will rise to 200 billion euros as banks reduce their property- loan books and shrink balance sheets to meet higher capital requirements, according to the study. Non-core lending, financing not connected to a bank’s main businesses, totaled 1 trillion euros, half of it by German institutions, it found. That adds to pressure to sell loans and assets.

“The problem will take years to solve, but the process is under way,” said Ralph Winter, chairman of Corestate Capital AG. The Zug, Switzerland-based real estate asset manager sponsored the study, which was compiled by the business school’s Real Estate Management Institute.

--Editors: Ross Larsen, Andrew Blackman.

To contact the reporter on this story: Simon Packard in London at packard@bloomberg.net

To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.net


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