More exposure

Forget Iceland, let's talk real estate. Anyone in the market to buy a dwelling in the CR has certainly noticed the way mortgage banks are jacking up their rates, even as the Czech National Bank is about to slash its own. But few outside the professional community have noticed the sharp jump in interbank rates and put two and two together. True, interbank rates fell yesterday after rising steadily for six weeks, but the spread continues to widen if you price in the CNB's expected rate cut on Thur. High interbank rates are evidence that banks are hesitant to lend money to each other, because they don't know what ugly surprises might show up on the counterparty's books. Some of the doubt revolves around highly leveraged real-estate developers whose credit lines have been curtailed or halted as lenders realize the folly of their past ways. Banks were slow to reveal their exposure to Iceland, but the end results weren't so bad. It's time for them to come clean on their exposure to developers and construction companies too. [Czech Republic property]