Short-sellers are stacking up to bet against troubled German bank Deutsche Pfandbriefbank (PBB) over worries about its exposure to US commercial property.
Almost 8% of the company’s shares were being shorted, according to the Federal Gazette.
Last week, PBB Issued a statement reassuring investors about its final position after one of its main shareholders cut its holding.
Morgan Stanley (NYSE:MS) also advised clients to reduce holdings in the bank's bonds due to its US exposure.
PBB has become a pinch point for property groups in Germany, which as well as problems in the US are now seeing values at home tumble due to the slowdown in the economy and trends such as working from home.
According to German banking association VDP today, office property prices fell by 5.2% in the final quarter of 2023 and by 13.3% year-on-year.
Retail prices did a little better but were still down by more than 9% and this year has seen the situation deteriorate further according to economists, adding to the pressure on lenders’ balance sheets.
"The property market remains in a downturn as we start 2024, and prices continue to drop. It will be some time before property buyers and sellers reach a new price balance, and only then will we see a noticeable recovery in the market," he said.
Jens Tolckmitt, VDP's chief executive.commented:"The property market remains in a downturn as we start 2024, and prices continue to drop. It will be some time before property buyers and sellers reach a new price balance, and only then will we see a noticeable recovery in the market.”
He pointed to a rise in retail rents for the first time in four years as a sign of encouragement.