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FDIC Sales of CRE Bank Loans Bring Risk to Other Banks

If the prices negotiated are too low, big depositors and investors in other banks could react, putting more of the institutions into trouble.

Bank loan assets are finding themselves on the market, whether the FDIC expecting to sell the $60 billion worth retained from the Signature Bank closure sometime this summer, or PacWest selling 74 construction loans to Kennedy-Wilson Holdings for $2.4B, a discount of $200M.

With increased pressure on CRE loans and greater numbers of assets becoming distressed in the near future, there’s no reason to think that the discounting has ended. That could pose big systemic problems, as Arkhouse managing partner Gavriel Kahane tells GlobeSt.com.

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Erik Sherman

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