Banks in Frankfurt Skyline
The ECB’s guidance published on March 15, 2018 is likely to increase the pressure on European banks to follow the approach Irish and UK institutions took to clean up their NPLs, executing bulk or smaller note sales.
A new report issued by property advisors JLL shows that German banks boosted their commercial real estate lending in 2014 by 11% to 37bn last year, and are anticipating about the same or slightly higher volumes this year.
The JLL study, which surveyed 15 banks active in commercial real estate financing and who made up 70% of all new business lending last year, highlights how the low interest rate climate means that new borrowing and refinancing options remain plentiful for the time being. Competition among lenders is keeping margins low, and are likely to remain low for a while.
Leading the list of active lenders last year was Frankfurt-based Helaba with €5.5bn in new business, or 15% of the volume generated by the banks surveyed. Next was DG Hyp with €4.7bn (13%) and HSH Nordbank with €4.2bn, 50% more than in the previous year. pbb Deutsche Pfandbriefbank, HypoVereinsbank and Berlin Hyp each took an 11% share of the total volume.
Of the big lenders, only DG Hyp and Aareal Bank saw a decrease in new business last year, by 12% and 13%, respectively. The latter was impacted by the takeover of Corealcredit, JLL said. With the takeover of WestImmo, Aareal expects another fall in new business volume to €6bn- €7bn in Germany and abroad in 2015.
Despite new business growth in Germany, total loan portfolios (in Germany and abroad) fell by 6% to €226.4bn. The reduction is primarily driven by the two banks that are attempting to reduce their portfolio, which are Hypothekenbank Frankfurt (the former Eurohypo) and WestImmo, which registered a reduction of 42% and 28%, respectively.
HSH Nordbank lost 20% of its portfolio, despite strong new business growth, BayernLB 11%. Aareal’s loan book grew by 15% due to the Corealcredit takeover and is expected to increase with the WestImmo acquisition (see article elsewhere in this issue). Following 9% growth, Helaba replaced Hypothekenbank as the bank with largest portfolio, now managing €34.3bn in its loan book.