Regulatory

Global: German Financial Regulator Issues Caution on Commercial Property and Bank Profits in 2024

0
German Financial Regulator Issues Caution on Commercial Property and Bank Profits in 2024
Share this article

Germany’s financial market regulator, BaFin, has raised concerns about the outlook for bank profits in 2024 and identified commercial property as a major risk amidst the country’s most significant real estate crisis in decades.

BaFin President Mark Branson, in a podcast aired on Tuesday, expressed a more pessimistic view, emphasizing the challenges faced by the industry due to higher interest rates, insolvencies, and a significant slowdown in property transactions. While BaFin has consistently highlighted risks in the overheated property sector, Branson’s comments underscore a heightened level of concern.

“Many went overboard in times of extremely low interest rates. That is why a necessary correction has come,” Branson stated in the Finanz-Szene podcast, designating real estate as “risk No. 1.”

Branson acknowledged that the issues faced by developers and real estate companies would continue to weigh on prices and transactions for an extended period. He indicated that the sector’s recovery might be slow, cautioning that while the broader financial sector could absorb the challenges, individual players might face more significant impacts.

Highlighting the previous year’s positive profitability, Branson noted that 2024 is expected to be “more difficult.” The head of BaFin pointed out that while higher interest rates had contributed to banks’ income in 2023, certain costs in loan books would manifest with a time lag, impacting financial institutions in 2024 and subsequent years.

Share this article

Global: US Lawmakers Urge Meta to Clarify Crypto and Blockchain Plans

Previous article

Nigeria: Federal Government Greenlights Overhaul of FIRS Organisational Structure

Next article

You may also like

Comments

Comments are closed.

More in Regulatory