The FSA has warned banks to expect big losses from commercial property loans this year.
In the regulator’s Financial Risk Outlook for 2008, it said that commercial property lending by banks has increased rapidly and, as a percentage of
The FSA warned that the impact of a property downturn on banks will be worsened by the fact that a high proportion of the lending is on unlet properties.
“Arrears rose in 2007 and there is a risk that banks will face increased impairment charges in 2008,” said the report.
“Commercial property companies are likely to experience weaker rental income, mainly through a rise in vacancies, leaving them less able to service their borrowings.”
“This could further increase
“The impact of falling commercial property prices on CMBS could also affect banks’ profitability.”
