Feeling the heat

Over 20 foreign banks including giants like Merrill Lynch, Bank of American, HBOS, RBS and Bank of Tokyo are withdrawing or considering scaling back lending to the commercial property market in Australia, it is claimed...

The Property Council of Australia says it is alarmed that foreign financiers are leaving the Australian property market at an accelerating pace. It has carried out a survey of its members and found that 23 banks have either already decided to withdraw funding or massively reduce their involvement.

'Foreign banks are already refusing to roll over their finance. There is evidence that they are exiting syndicates of well run Australian property businesses and tenanted properties,' the council says.

But some of the banks have denied the claims while others have admitted that they are re-examining their options. 'We have a significant commitment to our property finance customers and will continue with those commitments. As you would expect, and in line with all lenders, including the major banks, in this property downturn we are revisiting our risk appetite for the types of businesses that we will lend to,' said an HBOS spokesman.

BNP Paribas said the bank was 'committed to Australia'; while RBS said it was 'continuing to support its corporate commercial property clients in Australia'.

'We continue to lend in all the sectors that we participate in, and that includes commercial property,' said a Spokesman for HSBC.

Bank of America said it was re-financing. 'We are working with our clients and working with them on refinancing alternatives as required. We have full intention to keep working with the Australian property sector, locally and overseas, as they look at refinancing and recapitalisation requirements,' it said.

Dexia SA has announced its intention to withdraw from wholesale financing in Australia. Lehman Brothers Australia went into administration in September and Toronto Dominion has reportedly closed its Sydney office.

Source: www.propertywire.com