Wells Fargo is one of several major United States lenders that have begun to expand their activities in the United Kingdom commercial real estate market, taking advantage of the retrenchment still underway by European banks. Real estate funding previously provided by lenders from Germany, Spain, Ireland needs to be replaced as those lenders focus on liquidating distressed portfolios.
According to Bloomberg reporters:
The San Francisco-based bank plans to increase its U.K. business as the amount of real-estate debt maturing in the country this year exceeds available funding by $25 billion, real-estate broker DTZ said in a November report. That funding gap is widening profit margins, attracting debt funds, insurers and other U.S. banks, including Bank of America Corp., who can charge borrowers higher interest rates.
Wells Fargo already has announced the relocation of three senior commercial property lenders from the U.S. to the bank’s London office. Although the bank has not publicly announced a total lending commitment, various sources estimate that Wells Fargo’s current lending rate of GBP 500 million per year could roughly double in the coming years, including funding for hotel chains, office buildings, and industrial parks.