Financial Stability Risks from Commercial Real Estate: Germany

August 1, 2024

Preview Citation

Format: Chicago

Mustafa Saiyid. Financial Stability Risks from Commercial Real Estate: Germany, (USA: International Monetary Fund, 2024) accessed December 21, 2024

Summary

Following post-pandemic tightening of monetary policy in advanced economies, commercial real estate (CRE) markets have been under pressure globally, including in Germany. This 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. It finds that German banks, in aggregate, are adequately capitalized and sufficiently liquid to absorb potential losses. However, elevated CRE-related credit risks suggest the need for close monitoring of some individual institutions, conservative capital distributions, adequate loan-loss provisions, retention of macroprudential buffers, and testing of financial safety arrangements.

Subject: 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

Publication Details

Pages:

16
Volume:

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DOI:

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Issue:

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Series:

Selected Issues Paper No. 2024/035
Stock No:

SIPEA2024035
ISBN:

9798400287251
ISSN:

2958-7875

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