However, losses on loans secured by existing non-owner occupied commercial real estate have been much more modest, suggesting that banks’ efforts to maintain concentration ratios below 300 percent of capital may constrain lending for some creditworthy borrowers.
Moreover, to generate loan volume without increasing real estate lending, many banks are now targeting growth in commercial and industrial (C&I) loans, a type of lending with which they may have less expertise. In fact, banks have generally experienced higher loss rates on C&I loans than on commercial real estate secured loans (excluding construction loan losses), even through the crisis.