Financial Stability Risks from Commercial Real Estate: Germany
Selected Issues Papers, August 1, 2024
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Bibliographic details
- Authors: Mustafa Saiyid
- Published: August 1, 2024
- Series: Selected Issues Papers
- DOI: https://doi.org/10.5089/9798400287251.018
Summary and main findings
- Following post-pandemic tightening of monetary policy in advanced economies, commercial real estate (CRE) markets have been under pressure globally, including in Germany.
- The paper explores the channels of CRE impact for the German financial sector, and the potential size of impact for individual German banks based on publicly available data.
- Aggregate assessment: German banks, in aggregate, are adequately capitalized and sufficiently liquid to absorb potential losses.
- Elevated risks: Elevated CRE-related credit risks suggest the need for close monitoring of some individual institutions.
Channels of CRE impact and stress assessment
- Explores CRE channels affecting the German financial sector using publicly available data.
- Assesses potential size of impact for individual German banks.
- Emphasizes both capital adequacy and liquidity positions in absorbing CRE losses.
Policy implications and recommendations
- Close monitoring of some individual institutions with elevated CRE-related credit risks.
- Conservative capital distributions.
- Adequate loan-loss provisions.
- Retention of macroprudential buffers.
- Testing of financial safety arrangements.
Publication metadata and subject scope
- Author: Mustafa Saiyid
- Date: August 1, 2024
- Series: Selected Issues Paper No. 2024/035
- Volume: 2024
- Issue: 035
- Pages: 16
- DOI: https://doi.org/10.5089/9798400287251.018
- Stock No: SIPEA2024035
- ISBN: 9798400287251
- ISSN: 2958-7875
- Subjects: Collateral, Covered bonds, Financial institutions, Financial sector policy and analysis, Financial sector risk, Loans, Nonperforming loans
- Keywords: B. real estate development, Collateral, commercial real estate, commercial real estate exposures, Covered bonds, CRE exposure, CRE loan, D. solvency stress analysis, Financial sector risk, German banks' capital and liquidity, German financial contagion, German household and corporate sector vulnerabilities, German insurers' solvency, Germany financial sector policies, Global, Loans, Nonperforming loans, stress impact, stress tests
Source: IMF Selected Issues Paper — "Financial Stability Risks from Commercial Real Estate: Germany" by Mustafa Saiyid, August 1, 2024.
Content in this bundle
- 1. Real Estate Price Developments