"Due to higher US interest rates and a shift to remote work accelerated by Covid-19, the US office market continues to face adverse conditions combined with extremely low liquidity the Aozora Bank in Japan."

On Friday saw a second straight day of steep declines in Japanese lender Aozora Bank's shares, knocking hundreds of billions of dollars off its market value after the company predicted a full-year net loss due to subpar real estate loans in the US.

Due to increased borrowing rates and decreased demand as more individuals work from home in the wake of the epidemic, prices in the US commercial real estate market have dropped precipitously.

Aozora had dropped 27.4 percent the day before, shaving $870 million off its market capitalization, and was down 15.05 percent at 2,172 yen at the Tokyo trade break, according to Bloomberg.

The company announced a 14.7 billion yen ($100 million) net loss for the nine months ending in December on Thursday. It also adjusted its full-year projection, which had been a 24 billion yen net profit, to a 28 billion yen net loss.

"Due to higher US interest rates and a shift to remote work accelerated by Covid-19, the US office market continues to face adverse conditions combined with extremely low liquidity," the bank stated.

According to the statement, it has "reevaluated all US non-recourse office loans and reviewed property valuations from a forward-looking perspective" and made extra reserves for bad loans.

When Japan's property-fueled economic bubble burst in the early 1990s, Aozora—then known as Nippon Credit Bank—was among the most well-known victims and had to be placed under government ownership.

The recent recession in commercial real estate has also affected other banks. According to Bloomberg, New York Community Bancorp has put aside $522 million for loan losses, more than ten times what experts had predicted.

It further stated that a surge of substandard loans connected to commercial real estate in the US and Europe affect banks and investment managers in South Korea.

Deutsche Bank of Germany said on Thursday that it increased its provisions for losses in the industry by four times in the fourth quarter compared to the same period last year.

End//voice7news.tv