Banks reduce commercial lending
(26 March 2010 – Australia) According to a report in The Australian Financial Review, values in the listed property sector have reduced by over 20 percent, in comparison to a year ago, prompting the major banks to reduce their commercial property related loan book.
In response to the droop in the commercial property sector, jointly, lenders have slashed their exposures by more than A$16 billion, according to The Adviser.
Since March 2009, National Australia Bank has reduced its commercial loan book by A$3.1 billion and its big four rival Westpac reduced theirs by around A$10 billion in the last 12 months to September last year.
Commonwealth Bank of Australia marginally adjusted its commercial property exposure in the second half of 2009 by A$1.9 billion, while ANZ sliced theirs by A$3.4 billion.
Ross Griffiths, CBA’s chief credit officer, told The Australian Financial Review that the bank was forced to reduce its exposure after wholesale borrowers such as real estate investment trusts raised equity specifically to reduce debt loads.
Mr Griffiths noted that any new commercial property exposure is expected to be of higher quality, meaning lower loan to value ratio, and good servicing cover.
NAB property finance general manager Andrew Balzan said he expects banks to increase their appetite for commercial loans when the sector starts to recover.
Since March 2009, National Australia Bank has reduced its commercial loan book by A$3.1 billion and its big four rival Westpac reduced theirs by around A$10 billion in the last 12 months to September last year.
Commonwealth Bank of Australia marginally adjusted its commercial property exposure in the second half of 2009 by A$1.9 billion, while ANZ sliced theirs by A$3.4 billion.
Ross Griffiths, CBA’s chief credit officer, told The Australian Financial Review that the bank was forced to reduce its exposure after wholesale borrowers such as real estate investment trusts raised equity specifically to reduce debt loads.
Mr Griffiths noted that any new commercial property exposure is expected to be of higher quality, meaning lower loan to value ratio, and good servicing cover.
NAB property finance general manager Andrew Balzan said he expects banks to increase their appetite for commercial loans when the sector starts to recover.
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