In the first six months of this year, London-based Barclays bank set aside £896 million, or about $1.2 billion, to cover loans likely to turn sour, the bank disclosed on 27 July. The amount is more than double that in the first half of 2022.

Deutsche Bank has lifted its loan-loss reserves by 72 percent to €401 million, equivalent to about $446 million, in this year’s second quarter, Germany’s biggest lender reported on 26 July, citing “an uncertain macroeconomic environment.”

Spain’s Santander Bank has raised its reserves 21 percent during this year’s first six months, compared to the same period last year.

Although inflation in the Eurozone slowed to 5.3 percent in July, it remains more than twice the European Central Bank’s (ECB’s) 2-percent target. The ECB and Bank of England have continued to raise rates, even though the zone and the U.K. slipped into a technical recession in this year’s first quarter.

“The near-term economic outlook for the euro area has deteriorated, owing largely to weaker domestic demand,” ECB president Christine Lagarde told a 27 July press briefing. “Higher inflation and tighter financing conditions are dampening spending.”

The Bank of England raised its key rate to 5 percent in June, which pushed the common two-year, fixed-rate mortgage’s rate to 6.83 percent as of 27 July, compared to 3.94 percent a year earlier, according to data service Moneyfacts.

As we have reported, paying more for their loans and interest rates keep rising, more than two million Brits will be forced to refinance their mortgage this year and next; they will be looking at payments hundreds of pounds higher than they are now.

TREND FORECAST: It’s not consumer loans that will hit the lenders. As with the United States and much of the world, the greatest danger to banks’ loan portfolios lies in the flailing commercial real estate sector that has been escalated by the Office Building Bust which we had forecast would occur more than three years ago… but were ignored by the mainstream media. The higher rates rise and the less money they have coming in the harder the banks and lenders will be hit. The worst is yet to come.

Skip to content