M&T Bank Rescues New York’s Troubled Commercial Real Estate Sector

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The bank’s move came after the Federal Reserve decided in December that M&T capital levels would be the lowest of all. 33 major US banks in an “extremely unfavorable” economic scenario.

“They fared badly in this stress test,” said Peter Winter, an analyst at Wedbush Securities. “Regulators have taken a harder look at commercial real estate.”

Buffalo-based M&T has emerged over the past two decades. as a major lender for local developers… Past projects included a $ 230 million loan to build a TWA hotel at John F. Kennedy International Airport. The bank invested $ 6.2 billion in New York City real estate last year, including about a fifth of its office loan portfolio, according to Evercore ISI.

M&T emerged from the Great Recession as one of the strongest banks in the country; Warren Buffett was the main shareholder until 2017. But recent years have been more difficult, and over the past 12 months, the bank’s share price has grown by half that of its peers. The Delta option further pushed back the day when large numbers of employees would return to the office.

“Their impact on real estate put pressure on stocks,” Winter said, adding that M&T may be able to avoid losses as she wrote commercial real estate loans at a price below market.

Earlier this year, the bank agreed to a $ 7.6 billion merger with Connecticut-based People’s United Financial. The deal should further mitigate M&T real estate risks.

“I wouldn’t think of it as reducing our impact,” D’Arcy said. “I would think of it as the growth of other parts of the bank.”

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