Will German banks be real estate’s next casualties?
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Will German banks be real estate’s next casualties?

The partially built Elbtower serves as an emblem of Germany’s wider economic problems | Photo: Alamy

A private debt hangover in real estate is threatening middle-class retirement savings across Germany. Local banks, which focused more on senior loans, should be safer. But are these lenders ready to finance the recovery in commercial property that the German market so badly needs?

When Austrian real-estate group Signa went bankrupt late last year, some puzzling names appeared among the list of lenders affected, particularly in Germany, the firm’s biggest country of operation. Somehow a pension fund for German thespians and another for orchestral musicians had been lending money to Signa.

More than 50 German insurance companies have exposure to the company, according to internal data at financial supervisor Bafin. Signa, it seems, also had a relationship with BVK, a public institution in Munich that manages pension assets for the performing arts and 10 other professional groups, from Bavarian architects to pharmacists.

The debt is all well-collateralized and amounts to less than 1% of the funds’ assets, according to the BVK. Bafin has similarly downplayed the impact of Signa's failure on the German insurance industry.


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EMEA editor
Dominic O’Neill is EMEA editor. He joined Euromoney in 2007 to cover emerging markets, focusing on central and eastern Europe, Middle East and Africa, and later on Latin America. Based in London, he has covered developed market banking since 2015.
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