Nearly a year on from a banking crisis that led to the collapse of three US regional lenders and the emergency takeover of Credit Suisse in Europe, a fresh chill is running through banks as far apart as New York, Tokyo and Zurich.
Common to all of them — mounting losses on lending to the troubled commercial property sector.
On Wednesday, shares in New York Community Bancorp (NYCB) plunged 38% after it reported a loss of $252 million for the last quarter. The regional lender set aside $552 million in the fourth quarter to absorb loan losses, up from $62 million in the previous quarter. The increase was driven partly by expected losses on a loan used to finance an office building, it said.
The lender helped drag the KBW Regional Banking Index down 6% on Wednesday, its biggest daily fall since last May — the same month California-based First Republic became the third US banking casualty last year.
The index slid further Thursday and was down 4.8% by 11.19 a.m. ET as shares in NYCB, as well as other regional banks, suffered sharp losses. NYCB’s stock fell almost 13%, Banc of California 8%, and BankUnited 8%.
A big chunk of NYCB’s losses were tied to office buildings, it said in its earnings statement. CEO Thomas Cangemi referred to “general office weaknesses throughout the country” in a call with investors.
Since the turmoil last spring, investors and regulators have been on high alert for renewed stress among banks, homing in on their exposure to the ailing commercial real estate market.
The value of many buildings has plummeted as millions of workers have stuck with pandemic-era remote working, leaving vast tranches of office space vacant or underused. At the same time, historically high interest rates have made it harder for real estate developers — who often take out huge loans to finance projects — to make good on their repayments.
On Thursday, Japan’s Aozora Bank said bad loans tied to US offices were partly to blame for its projected annual loss of 28 billion yen ($190 million) last year. The lender had previously expected to make a net profit of 24 billion yen ($160 million). The news sent its shares plunging over 21%.
The bank said it would take another year or two for the US office market to “stabilize” as more people returned to work in-person, and as the Federal Reserve moves from hiking interest rates to cutting them.
Losses are mounting in Europe, too. Swiss private bank and wealth manager Julius Baer announced Thursday that its adjusted profit had tanked 55% last year because it lost 586 million Swiss francs ($680 million) on loans made to a single “European conglomerate.” Its CEO Philipp Rickenbacher announced his departure in the wake of the losses.
Julius Baer declined to confirm the identity of the company to CNN.
But, according to a Reuters report, that company is Signa Group, an Austrian property developer that, in 2019, bought part of New York’s iconic Chrysler building. Several Signa subsidiaries filed for insolvency in December, Reuters reported.
Much bigger players are girding themselves for losses linked to commercial real estate.
Germany’s biggest lender Deutsche Bank said Thursday that it had allocated €123 million ($133 million) during the last quarter to absorb potential defaults on its US commercial real estate loans. That’s more than quadruple the amount it set aside during the same three-month period in 2022.
‘Small ripples’
Cangemi, of NYCB, said his company’s poor fourth quarter was partly the result of acquiring $13 billion worth of loans from now-failed Signature Bank, one of the three regional US lenders that collapsed during last year’s banking crisis.
Those lenders failed to anticipate and properly manage the consequences of soaring interest rates, and worried depositors frantically rushed to withdraw their cash. The old-fashioned bank runs sent financial markets into a panic that eventually pushed Credit Suisse — then one of the world’s biggest lenders — over the edge and prompted a hurried takeover by rival UBS.
Philip Lawlor, managing director of markets research at Wilshire Indexes, said the recent turbulence is unlikely to rock big, well-capitalized banks this time around.
“One should not be complacent,” he told CNN, noting that last year’s bank runs all “started with small ripples that just built and built.”
The KBW Bank Index, which tracks 24 leading US banks, is up 29% since hitting a low last May. Europe’s benchmark Stoxx Europe 600 Banks index, which tracks 42 big EU and UK banks, is up 23% since a low in late March.
Both indexes were trading lower on Thursday.
“This could be sort of a replay of what we saw last year — there could be contagion — but it could be limited to a number of smaller banks and not ripple through to the systemically important ones,” Lawlor said.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
MONTREAL – The Quebec Professional Association of Real Estate Brokers says Montreal-area home sales rose 9.3 per cent in August compared with the same month last year, with levels slightly higher than the historical average for this time of year.
The association says home sales in the region totalled 2,991 for the month, up from 2,737 in August 2023.
The median price for all housing types was up year-over-year, led by a six per cent increase for the price of a plex at $763,000 last month.
The median price for a single-family home rose 5.2 per cent to $590,000 and the median price for a condominium rose 4.4 per cent to $407,100.
QPAREB market analysis director Charles Brant says the strength of the Montreal resale market contrasts with declines in many other Canadian cities struggling with higher levels of household debt, lower savings and diminishing purchasing power.
Active listings for August jumped 18 per cent compared with a year earlier to 17,200, while new listings rose 1.7 per cent to 4,840.
This report by The Canadian Press was first published Sept. 6, 2024.
In the quest to find cities where renters can enjoy the best of all worlds, a recent study analyzed 24 metrics across three key categories—Housing & Economy, Quality of Life, and Community. The study ranked the 100 largest cities in Canada to determine which ones offer the most to their renters.
Here are the top 10 cities that emerged as the best for renters in 2024:
St. John’s, NL
St. John’s, Newfoundland and Labrador, stand out as the top city for renters in Canada for 2024. Known for its vibrant cultural scene, stunning natural beauty, and welcoming community, St. John’s offers an exceptional quality of life. The city boasts affordable housing, a robust economy, and low unemployment rates, making it an attractive option for those seeking a balanced and enriching living experience. Its rich history, picturesque harbour, and dynamic arts scene further enhance its appeal, ensuring that renters can enjoy both comfort and excitement in this charming coastal city.
Sherbrooke, QC
Sherbrooke, Quebec, emerges as a leading city for renters in Canada for 2024, offering a blend of affordability and quality of life. Nestled in the heart of the Eastern Townships, Sherbrooke is known for its picturesque landscapes, vibrant cultural scene, and strong community spirit. The city provides affordable rental options, low living costs, and a thriving local economy, making it an ideal destination for those seeking both comfort and economic stability. With its rich history, numerous parks, and dynamic arts and education sectors, Sherbrooke presents an inviting environment for renters looking for a well-rounded lifestyle.
Québec City, QC
Québec City, the capital of Quebec, stands out as a premier destination for renters in Canada for 2024. Known for its rich history, stunning architecture, and vibrant cultural heritage, this city offers an exceptional quality of life. Renters benefit from affordable housing, excellent public services, and a robust economy. The city’s charming streets, historic sites, and diverse culinary scene provide a unique living experience. With top-notch education institutions, numerous parks, and a strong sense of community, Québec City is an ideal choice for those seeking a dynamic and fulfilling lifestyle.
Trois-Rivières, QC
Trois-Rivières, nestled between Montreal and Quebec City, emerges as a top choice for renters in Canada. This historic city, known for its picturesque riverside views and rich cultural scene, offers an appealing blend of affordability and quality of life. Renters in Trois-Rivières enjoy reasonable housing costs, a low unemployment rate, and a vibrant community atmosphere. The city’s well-preserved historic sites, bustling arts community, and excellent educational institutions make it an attractive destination for those seeking a balanced and enriching lifestyle.
Saguenay, QC
Saguenay, located in the stunning Saguenay–Lac-Saint-Jean region of Quebec, is a prime destination for renters seeking affordable living amidst breathtaking natural beauty. Known for its picturesque fjords and vibrant cultural scene, Saguenay offers residents a high quality of life with lower housing costs compared to major urban centers. The city boasts a strong sense of community, excellent recreational opportunities, and a growing economy. For those looking to combine affordability with a rich cultural and natural environment, Saguenay stands out as an ideal choice.
Granby, QC
Granby, nestled in the heart of Quebec’s Eastern Townships, offers renters a delightful blend of small-town charm and ample opportunities. Known for its beautiful parks, vibrant cultural scene, and family-friendly environment, Granby provides an exceptional quality of life. The city’s affordable housing market and strong sense of community make it an attractive option for those seeking a peaceful yet dynamic place to live. With its renowned zoo, bustling downtown, and numerous outdoor activities, Granby is a hidden gem that caters to a diverse range of lifestyles.
Fredericton, NB
Fredericton, the capital city of New Brunswick, offers renters a harmonious blend of historical charm and modern amenities. Known for its vibrant arts scene, beautiful riverfront, and welcoming community, Fredericton provides an excellent quality of life. The city boasts affordable housing options, scenic parks, and a strong educational presence with institutions like the University of New Brunswick. Its rich cultural heritage, coupled with a thriving local economy, makes Fredericton an attractive destination for those seeking a balanced and fulfilling lifestyle.
Saint John, NB
Saint John, New Brunswick’s largest city, is a coastal gem known for its stunning waterfront and rich heritage. Nestled on the Bay of Fundy, it offers renters an affordable cost of living with a unique blend of historic architecture and modern conveniences. The city’s vibrant uptown area is bustling with shops, restaurants, and cultural attractions, while its scenic parks and outdoor spaces provide ample opportunities for recreation. Saint John’s strong sense of community and economic growth make it an inviting place for those looking to enjoy both urban and natural beauty.
Saint-Hyacinthe, QC
Saint-Hyacinthe, located in the Montérégie region of Quebec, is a vibrant city known for its strong agricultural roots and innovative spirit. Often referred to as the “Agricultural Technopolis,” it is home to numerous research centers and educational institutions. Renters in Saint-Hyacinthe benefit from a high quality of life with access to excellent local amenities, including parks, cultural events, and a thriving local food scene. The city’s affordable housing and close-knit community atmosphere make it an attractive option for those seeking a balanced and enriching lifestyle.
Lévis, QC
Lévis, located on the southern shore of the St. Lawrence River across from Quebec City, offers a unique blend of historical charm and modern conveniences. Known for its picturesque views and well-preserved heritage sites, Lévis is a city where history meets contemporary living. Residents enjoy a high quality of life with excellent public services, green spaces, and cultural activities. The city’s affordable housing options and strong sense of community make it a desirable place for renters looking for both tranquility and easy access to urban amenities.
This category looked at factors such as average rent, housing costs, rental availability, and unemployment rates. Québec stood out with 10 cities ranking at the top, demonstrating strong economic stability and affordable housing options, which are critical for renters looking for cost-effective living conditions.
Québec again led the pack in this category, with five cities in the top 10. Ontario followed closely with three cities. British Columbia excelled in walkability, with four cities achieving the highest walk scores, while Caledon topped the list for its extensive green spaces. These factors contribute significantly to the overall quality of life, making these cities attractive for renters.
Victoria, BC, emerged as the leader in this category due to its rich array of restaurants, museums, and educational institutions, offering a vibrant community life. St. John’s, NL, and Vancouver, BC, also ranked highly. Québec City, QC, and Lévis, QC, scored the highest in life satisfaction, reflecting a strong sense of community and well-being. Additionally, Saskatoon, SK, and Oshawa, ON, were noted for having residents with lower stress levels.
For a comprehensive view of the rankings and detailed interactive visuals, you can visit the full study by Point2Homes.
While no city can provide a perfect living experience for every renter, the cities highlighted in this study come remarkably close by excelling in key areas such as housing affordability, quality of life, and community engagement. These findings offer valuable insights for renters seeking the best places to live in Canada in 2024.
