German banks vulnerable to housing bubble

FRANKFURT, Nov 25 (Reuters): Germany's banks are increasingly vulnerable to an overvalued property market and finance authorities should force lenders to build up capital buffers, the Bundesbank said on Thursday in a regular stability report.

Germany cut the so-called countercyclical buffer for banks to zero at the start of the pandemic but economic growth is now robust and bank lending is rapid, so they should be forced to hold more capital in preparation for a rainy day, the central bank said.