Basel III 'could restrict banks' property lending'

7 March 2012

Commercial property lending could be negatively affected by the implementation of updated regulations in the banking industry, an expert believes.

According to John Forbes, real estate funds partner at PwC, the new terms listed under the Basel III ruling may restrict the ability of financiers to offer such lending arrangements.

Following the global economic downturn, global regulators decided to create a fresh framework for the banking sector that will require lenders around the world to hold a tier-one capital figure of nine per cent.

However, Mr Forbes noted that in order to achieve this objective, banks will either have to take on the "hugely challenging" task of boosting their capital or "reduce their risk-weighted assets".

With this in mind, he told a Property Week webinar there are fears among analysts that real estate commercial lending will take a "disproportionate share of the pain" compared to other assets.

However, Chandan Economics revealed that US financiers increased their loans in this area for the first time in nearly two years in the fourth quarter of 2011.

By Gary Cooper

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