EU watchdog warns of pressure on commercial real estate market

Jan 25 (Reuters) – The European Systemic Risk Board (ESRB) warned on Wednesday that market stress from a possible sharp downturn in Europe’s commercial real estate sector could translate into systemic risk for banks, potentially raising capital requirements Could

The EU financial watchdog has issued a new recommendation on the need to force the bloc’s and member states’ authorities to track risks and force lenders to value collateral correctly while building up appropriate reserves.

In a statement, the ESRB said, “The sector is currently vulnerable to cyclical risks associated with high inflation, tightening financial conditions that limit the ability to refinance existing debt and obtain new debt, and weak growth prospects.” There is a clear decline in

According to the report, climate-related economic policies, especially changing building standards, shifts in e-commerce and increased demand for leasing office space, are exerting pressure on the sector.

The ESRB fears that a sharp decline in this sector could have systemic effects on the financial system and the wider economy, limiting banks’ ability to lend.

The European Systemic Risk Board is chaired by ECB President Christine Lagarde.

The original message in English is available on the code: (Balacz Koranyi, translated by Tomasz Kanik)

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