'Volatility Is Poison': German Bank To Stop U.S. Lending, Potentially Exit $4.6B Loan Book

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One of the world’s largest specialist real estate banks has halted new lending in the U.S. and could sell its $4.6B loan book there, citing volatility caused in large part by recent U.S. economic policy.

“This volatility is poison for the business activity of long-term property financing, it is poison for investors, it is also poison for banks, and that is why we are looking at these options,” Deutsche Pfandbriefbank CEO Kay Wolf said at a press conference this week, Reuters reported.

The bank said in announcing first-quarter results last week that it was examining options for its €4.1B ($4.6B) U.S. loan book.

“Against this background, pbb has decided not to enter into any new business on the U.S. property markets, and to look at all options for the existing U.S. business with an open mind,” the bank said in its results statement.

Last May, Blackstone bought a $1B portfolio of U.S. and UK performing loans from Pfandbriefbank.

Even before the recent volatility, the bank took write-downs on its U.S. loan portfolio as a result of an office market downturn in major American cities.

The U.S. accounts for 14% of its €29.3B loan book, with the UK accounting for 6%.

The bank's Q1 profitability was €24M, down 17% over the equivalent period last year. Provisions for loan losses were €26M, down from €47M in Q1 2024.

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