Commercial real estate problems hit banks

Investors are wondering when the pain of the commercial real estate downturn will hit the banks.

The last 24 hours have shown it's happening right now, with lenders on three continents reporting damage and two bank executives resigning.

??Japan's Aozora Bank fell more than 20 percent on Thursday, the maximum allowed in a single day by stock market rules, after the company said losses in its U.S. office loan portfolio would likely result in a net loss for the year ending in March. It will be its first losing year in 15 years. Aozora Bank's president will step down on April 1, the bank said.

??In Switzerland, private bank Julius Baer said CEO Philipp Rickenbacher has resigned after the bank had to use a provision of about $700 million for loans it can't get back from Austrian landlord Signa Group. Julius Baer said it would close the unit that originated the loans.

?? Things aren't quiet in the States either. New York Community Bancorp, which took over the assets of bankrupt Signature Bank, reported yesterday a sharp rise in loan losses, mostly

from commercial real estate. Its shares fell 38% on Wednesday.

And that's clearly not all the victims of the commercial real estate crisis. Who do you think will be next?

I remain convinced that commercial real estate is a major risk factor for both the Western banking system and the economy as a whole.