Financial stability: Bundesbank sees three main risks for German banks

According to the Bundesbank, financial stability in Germany is exposed to increased risks. The central bankers warn of increasing credit risks, high valuations on the financial markets, risks on the real estate market and high national debt. They are also critical of the growing importance of private credit, i.e. the granting of loans by shadow banks.

“The risks to financial stability remain elevated,” said Bundesbank board member Michael Theurer at the presentation of the financial stability report on Thursday in Frankfurt. He added: “The financial system must be prepared for future stress.”

Theurer particularly highlighted the uncertain geopolitical situation, the high valuations on the financial markets and the rising national debt. He was also surprised by new data on private residential property financing, which shows how much private individuals get into debt when buying a property. The risk on the residential real estate market had actually recently fallen.

The current figures are now making the Bundesbank nervous: for almost 40 percent of all loans granted in the second quarter of 2026, the loan amount reached a volume of 90 percent of the loan-to-value value. The latter is the conservatively calculated market value of a property. In ten percent of cases, the loan amount was even higher than the loan value.