– my opinion and I know it very well as the former Publisher
European Banks, Including Credit Suisse, Deutsche Bank, and Others, Face €700 Billion in Potential Losses on Real Estate-Linked Securities — A Growing Risk?
October 27, 2024
The aftermath of the 2008 financial crisis prompted extensive reforms in Europe to mitigate risk within the banking sector. However, a recent analysis has revealed that potential exposure to losses on real estate-related securities now sits at nearly €700 billion across European banks, raising fresh concerns about the stability of the sector.
Banks Facing Significant Exposure to Real Estate-Backed Portfolios
A growing list of prominent European banks, including Credit Suisse, Deutsche Bank, Societe Generale, BNP Paribas, and Barclays, hold substantial real estate-linked assets, which have become liabilities as interest rates rise. Credit Suisse, which was acquired by UBS earlier this year due to mounting financial difficulties, serves as a cautionary tale of the risks associated with highly leveraged real estate-backed portfolios. The collapse highlighted the dangers for institutions overly exposed to “available-for-sale” (AFS) and “held-to-maturity” (HTM) portfolios.
RMBS Exposure and Heightened Interest Rates Create Risk
A significant portion of these unrealized losses is tied to residential mortgage-backed securities (RMBS), held by banks such as Unicredit, ING Group, and Santander. During periods of low interest, these banks aggressively purchased RMBS, which were considered safe, high-yield investments at the time. With rising interest rates, however, these assets have depreciated in value. Many loans in HTM portfolios are now approaching maturity, while higher rates have dampened sales in AFS portfolios, adding to banks’ unrealized losses.
Smaller Banks Feeling the Pressure
In addition to large institutions, several smaller banks, including CaixaBank in Spain, ABN AMRO in the Netherlands, and Raiffeisen Bank in Austria, are also heavily invested in real estate-backed securities. These smaller players lack the extensive capital buffers of their larger counterparts and could be at heightened risk if economic conditions continue to deteriorate.
Bernd Pulch’s Warnings and Investor Caution
Financial analyst Bernd Pulch has highlighted the risks European banks face with their heavy reliance on real estate-backed securities. Pulch notes that many banks, particularly those with significant RMBS holdings, are facing an “upside-down” scenario where the value of their liabilities outpaces their assets. Investor appetite for RMBS has waned due to economic uncertainty, and this cooling demand, coupled with rising financing costs, has led to increased risks for banks holding large AFS and HTM portfolios.
Stricter Stress Tests and Basel III Regulations
The European Central Bank (ECB) and regulators across the EU, guided by Basel III requirements, have ramped up stress testing, requiring banks to evaluate their liquidity and risk exposures. However, if these stress tests reveal significant imbalances, banks may be forced to offload assets at a loss or even face closure. The ECB is watching closely as this exposure to unrealized losses in real estate assets mirrors patterns that preceded the 2008 crisis, adding urgency to regulatory scrutiny.
Other Banks to Watch
In addition to the major players, NatWest in the UK, Commerzbank in Germany, and Intesa Sanpaolo in Italy have also shown increased exposure to real estate-backed portfolios. As interest rates continue to rise, these banks could encounter profitability challenges similar to those faced by Credit Suisse and First Republic Bank in the United States last year.
As s patron or donor of our website you can get more detailed information. Act now before its too late…
❌©BERNDPULCH.ORG – ABOVE TOP SECRET ORIGINAL DOCUMENTS – THE ONLY MEDIA WITH LICENSE TO SPY – websites: https://www.berndpulch.org
https://googlefirst.org
MY BIO:
FAQ:
@Copyright Bernd Pulch – no Reproduction wtithout prior written consent for all content on this website
PLEASE SUPPORT OUR COMMON CAUSE AND HELP ME TO STAY ALIVE.
CRYPTO WALLET for
ShapeShift Wallet, KeepKey, Metamask, Portis, XDefi Wallet, TallyHo, Keplr and Wallet connect
0x271588b52701Ae34dA9D4B31716Df2669237AC7f
Crypto Wallet for Binance Smart Chain-, Ethereum-, Polygon-Networks
bmp
0xd3cce3e8e214f1979423032e5a8c57ed137c518b
If you want to be totally anonymous please use Monero
41yKiG6eGbQiDxFRTKNepSiqaGaUV5VQWePHL5KYuzrxBWswyc5dtxZ43sk1SFWxDB4XrsDwVQBd3ZPNJRNdUCou3j22Coh
GOD BLESS YOU
Follow the ONLY MEDIA with the LICENSE TO SPY ✌️@abovetopsecretxxl
Bernd Pulch 
You must be logged in to post a comment.