Japan skifields projects buried
THE Commonwealth Bank is moving to cut its exposure to Japan’s frothy property market by suddenly freezing a highly popular loan product that targeted the development and sale of holiday homes and resorts on Japan’s northern ski slopes.
One prominent property developer, who declined to be named, has described CBA’s decision last week to suspend its Japan Snowfields Property Loan as a “bombshell” that would cause many residential developments to be shut down.
It comes as banks around the world srcutinise their commercial property lending books in the face of a spike in bad debts.
Last month, CBA booked a $1.6 billion first-half charge due to its problematic loan book. It warned it was increasing vigilance over property and financial services given the souring economic climate. More than 7 per cent of the CBA’s loans book is tied up in commercial property.
Insiders told BusinessDay that CBA’s Tokyo office was in favour of maintaining and even expanding its Japan Snowfields product to include off-the-plan developments, but this was overruled by head office in Sydney.
Already the second stage of a Japanese ski resort development has been placed on hold as developers brace for an exodus of leveraged Australian investors.
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