Symposium of the Capital Markets Union foundation project
“40 – 30 – 20” – the total energy demand of the building sector in the EU is around 40%, the first United Nations Climate Change Conference took place around 30 years ago and there are still around 20 years left to achieve the climate targets. The specialist conference of the Capital Markets Union Foundation project “Real estate financing – challenges posed by the interest rate turnaround, supervision and sustainability” on 14 July at EBS in Oestrich-Winkel brought together representatives from academia, the market and supervision. The numerous participants discussed in particular the question of leeway in property financing so that “40 – 30 – 20” does not become a zero number.
Prof Ferdinand Mager from EBS hosted the event. In his opening speech, Prof. Andreas Pfingsten, Finance Centre at the WWU Münster, discussed various asset-based finance instruments that can be used for refinancing the real estate business as part of overall bank management. Dr Mario Jovanovic, Deutsche Bundesbank, explained the ratio behind the regulatory framework for the real estate business. In his view, the costs of macroprudential regulation are rather low and appropriate given the importance of the property business in the regulated banking market. Dr Nasar-um Ninullah Virk, EBS Lecturer, and Ziyi Weng, EBS Student, then gave insights into the performance of the property markets in Pakistan and China respectively. Thomas Köntgen, Deputy Chairman of the Management Board of Deutsche Pfandbriefbank, presented the effects of the energy and interest rate turnaround on property financing in Germany. In his opinion, the prime segment of the property business will continue to perform well in the future.
Laura Götz, a doctoral student at EBS, demonstrated in an empirical study on the Portuguese property market that climate risks are already being taken into account in banks’ risk management. The concluding panel discussion with Jens Tolckmitt, Managing Director of the Association of German Pfandbrief Banks, and other speakers of the day centred in particular on the question of whether and to what extent regulatory arbitrage in the property business between the highly regulated banking market and the less regulated non-bank financial sector is taking place or should take place in view of the challenges posed by the interest rate turnaround, supervision and sustainability.
Room for manoeuvre in the sustainable transformation
The discussion showed that the requirements for risk-adequate capital backing in banking have a significant influence on possible regulatory arbitrage. The question of what scope there will be in the future for what type of financing of the building sector in the sustainable transformation is one that the Capital Markets Union Foundation project will address again at upcoming events.
We would like to take this opportunity to thank all those involved for a successful Foundation Conference at EBS!