The paper examines the characteristics and riskiness of bank lending to corporations secured by commercial real estate or intended for its purchase (‘CRE’ loans), in the leading euro-area countries. Moreover, in the case of collateralized loans, the analysis assesses the relationship between the probability of deterioration in loan quality and the loan-to-value ratio at origination (LTV-O), which is the ratio of the loan amount to the real estate value at origination.
In Italy, the share of CRE loans is comparable to that observed in Spain (20 per cent of total loans), but lower than that observed in Germany and France, for example. In contrast to the latter two countries, loans in Italy with an LTV-O above 80 per cent are riskier than those with a lower indicator value (as in Spain). However, the share of such loans in total lending to the sector is relatively modest (less than 10 per cent), and two thirds of them are covered by additional collateral.
