U.S. stress tests to cite commercial real estate concern: report

(Reuters) - U.S. federal regulators are projecting losses of up to 12 percent on commercial real-estate loans over two years at the large banks that are undergoing stress tests, the Wall Street Journal reported, citing a document.

The regulators are likely to cite these loans as a major reason for why some of the large banks need additional capital, the newspaper said.

These losses have greater implications for the small and medium banks as they tend to have a higher exposure to commercial real-estate loans than the large banks, the paper said.

About 10 of the 19 largest U.S. banks being stress tested will be instructed by regulators to raise more capital, a source familiar with official talks told Reuters Monday.

Reporting by Jennifer Robin Raj in Bangalore; Editing by Neil Fullick