Smaller CRE-concentrated banks are more susceptible to elevated losses from deteriorating credit in the commercial real estate market once stimulus measures wind down and forbearance programs expire, Fitch Ratings warned Tuesday.
"There has been a very high correlation historically between U.S. bank failures and exposure to CRE lending," Fitch said.
However, the CRE losses are expected to peak below levels seen in the past, mitigated by an improving macroeconomic backdrop, notwithstanding uncertainty around variants and the potential for renewed lockdowns. the ratings service noted.
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