Deutsche Pfandbriefbank, also known as PBB, aimed to calm investors’ nerves on Thursday by affirming its financial resilience amidst a U.S. commercial real estate market downturn despite a continued decline in its stock value. Recently, the sector has been troubled by higher interest rates, refinancing challenges, and decreased office space usage, sparking concerns over potential defaults.
PBB, a German Bank, Says It Can Handle the US Real Estate Crisis
PBB, a part of the SDAX small-cap index that strongly emphasises real estate financing, made this reassurance in its second extraordinary disclosure in as many days as its equity and debt instruments experienced market pressure. The bank had previously characterised the current situation in the U.S. market as “the most significant real estate crisis since the global financial meltdown.”
Moreover, a recent drop in the shares of some regional banks in the U.S. has rekindled worries about the vulnerability of financial institutions to these conditions. Deutsche Bank, another prominent German financial institution, also recently increased its loan loss reserves for U.S. commercial real estate.
PBB has disclosed that its U.S. real estate market exposure amounts to 5 billion euros, representing 15% of its total portfolio. In a recent statement, the bank highlighted its robust liquidity position, stating it possesses double the regulatory required funds, ensuring operational stability without needing new unsecured financing for over six months.
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The bank reported that its liquidity coverage ratio (LCR) is at 212%, significantly surpassing the 100% regulatory mandate by 112 percentage points. Furthermore, PBB noted a continuous increase in retail deposits, now exceeding 7 billion euros ($7.53 billion).
As of 1415 GMT on Thursday, PBB’s stock had fallen by 2.8%, marking a 27% decrease since the beginning of the year. Meanwhile, PBB’s 150-million euro bond due in 2027 was trading at approximately 58.47 cents, showing slight day-to-day variation but a drop from 70.429 since Tuesday’s close.
