The Credit Edge by Bloomberg Intelligence Banks Run Into Real Estate Trouble, Political Strife
Jul 11, 2024
Bloomberg Intelligence analysts Arnold Kakuda & Jeroen Julius discuss banks' risks from political strife & real estate troubles. They dive into challenges faced by smaller US banks, European institutions, unrealized losses, and opportunities in preferred debt. The podcast explores strategies for maximizing returns, regulatory obstacles, and the implications of current market dynamics.
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Banking Sector Overview
- US banks face challenges from commercial real estate and political risks.
- European banks experience shrinking loan books and positive rating outlooks.
Shifting Focus to CRE
- Unrealized losses on bank balance sheets were a major issue in 2023, impacting regional banks significantly.
- Focus in 2024 shifts to asset quality and commercial real estate (CRE).
CRE Impact by Bank Size
- CRE issues primarily affect smaller regional banks (under $100B in assets).
- Larger banks are better prepared due to annual stress tests.