Big US banks withstand Fed’s commercial real estate shock scenario

NEW YORK, June 26 (Reuters) – Big U.S. banks survived a hypothetical 40% drop in commercial real estate values as a part of the U.S. Federal Reserve’s annual health test, easing fears about the banking sector as landlords struggle in a higher-for-longer interest rate world.

As risks mount in the CRE space, investors were looking to the Fed’s “stress tests” to assess how exposed America’s lenders are at a time when pandemic-era work habits continue to empty office towers, sending vacancy rates past historic peaks to a record 20%.

Source: REUTER