German property lender PBB to shun new US business
[FRANKFURT] Deutsche Pfandbriefbank, one of Germany’s top property financiers, said it would not take on new business in the United States and that it would examine “all options” for its existing US business.
The lender, also known as PBB, reported a 17 per cent drop in first-quarter net profit on Wednesday (May 14) and said it would review the timing of a planned share buyback as markets were more volatile than expected.
The announcement follows a wave of bad news in the past year for the bank, which dates back to the 1860s and was bailed out by the government in the 2009 financial crisis, as it navigates what it has called “the greatest real estate crisis” since then.
Its quarterly post-tax profit was 24 million euros (S$34.9 million), compared with 29 million euros a year earlier. Provisions for loan losses fell to 26 million euros from 47 million euros a year earlier.
“While the economic situation in Germany and Europe is stabilising, we are seeing a significant increase in volatility in the USA,” CEO Kay Wolf said in a statement.
PBB has in recent years bet heavily on the US market by offering commercial real estate loans, which have now come under pressure due to high office vacancy rates, falling property prices after interest rate hikes, and greater flexibility to work remotely.
In a revamp last year, PBB said it would reduce its exposure to the US property market and focus less on office buildings as it tries to restore profitability. REUTERS
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