German banks dominate UK financing market

German financiers have further intensified their presence on the UK commercial property market in the past six months, according to a new report by Savills. German banks accounted for virtually half of the list of 23 top lenders currently active in the UK market. They include Deka Bank, Deutsche Pfandbriefbank, Deutsche Postbank, DG Hyp, Eurohypo, Helaba, Landesbank Baden-Wurttemberg, Munich Hyp, Nord LB/Deutsche Hypo, Landesbank Berlin and Westdeutsche Immobilienbank.

Back in March, Savills' list totalled only 12 players and none were willing to lend much more than £100 mln (EUR 108 mln). The appetite for risk is now significantly higher, with most banks prepared to provide loans totalling around £20 mln, William Newsom, UK head of valuation at Savills said in an interview with PropertyEU. 'In the first half, financiers were still holding back, but now they are feeling more confident. We're seeing an increase in lot sizes with several even willing to go above £100 mln.'

Eurohypo and Barclays are two examples of banks now willing to extend their boundaries beyond £100 mln, Newsom said. 'One of the surprises of this list is the banks that aren't there,' Newsom added. 'There's a lot of talk about Middle Eastern money, but we haven't seen any banks from the Emirates or Qatar lending far this year.' Another surprise, he said, was the inclusion of Lloyds and Royal Bank of Scotland, both of which have massive toxic debt piles. Newsom: 'Clearly, the UK government has instructed them to keep the wheels of industry oiled.'

The list is based on Savills' database of over 100 lenders and indicates the finance markets are stabilising again following a period of high volatility over the past two years, during which the gap between base rate and LIBOR reached a high in Q408 at 160 bps. Newsom: 'We are able to confirm that these banks are active in the market because we have received letters of instruction for valuations.'