It's commonly known that commercial banks are facing pressures from commercial real estate loans. Difficulties in refinancing because of higher interest rates, sinking valuations, and falling demand for space because of hybrid work, meaning lower revenue, all of which could turn into trouble for lenders.

But the problem is becoming a lot deeper. According to the Financial Times, the amount of bad property debt is higher at big banks than their existing reserves against it. "The average reserves at JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, Goldman Sachs and Morgan Stanley have fallen from $1.60 to 90 cents for every dollar of commercial real estate debt on which a borrower is at least 30 days late, according to filings to the Federal Deposit Insurance Corporation," they wrote.

The numbers are average and vary wildly among the banks. The CRE coverage ratio was close to the same in 2022 and 2023 for JPMorgan Chase and remains close to 3.0. But for each of the other banks, the ratio is below 1.0. Citigroup and Goldman Sachs were each below 0.5. Goldman was the only bank whose CRE coverage ratio was higher in 2023 than in 2022.