French bank Société Générale is set to pull out of property lending, dealing a further blow to the debt market.
The bank has suspended new loans to UK and continental European property projects and will undertake a review on whether to sell or close its real estate finance unit, owing to the worsening eurozone debt crisis.
The move, which will not affect deals which have already been granted credit approval, comes just five months after the firm drafted in high-profile former Lehman Brothers bankers James Jakeman and Pierpaulo Isaaci.
The duo were recruited to head a four-strong London property lending team with a target of lending €500m in its first year.
SocGen has also put a portfolio of non-performing loans of around €500m up for sale, and has held discussions with private equity firms about the possibility of selling €2bn-€3bn of its overall €4bn performing loan book.
The sale of the real estate loan portfolio is being undertaken by global real estate and lodging finance head Jean-Francois Despoux and deputy head of global finance David Coxon.
Around 25 private equity firms are understood to have signed non-disclosure agreements regarding the sale, and talks have been held about the possibility of selling a larger portfolio.
SocGen is the second bank in as many weeks to pull withdrawal from new lending. On 4 November Eurohypo’s parent company, Commerzbank, curtailed Eurohypo’s new loan remit.
bridget.oconnell@estatesgazette.com
