The Globe and Mail reports in its Saturday edition that Canada's banking regulator is warning that global banks will be hit by losses in commercial real estate as valuations sink under the weight of higher borrowing costs and weak demand. The Globe's Stefanie Marotta writes that Peter Routledge, who heads the Office of the Superintendent of Financial Institutions (OSFI), told a banking conference Friday that risk in office space and multiunit housing is looming over lenders, especially those with significant loan books in the United States. "It's likely that banks across the world are going to suffer some losses associated with commercial real estate and they're likely to be meaningful," Mr. Routledge said. Canadian banks may have to set aside higher-than-expected provisions for credit losses -- the funds that banks allocate for loans that could default. He described the higher risk level for office space in the United States as dark red, and in Canada as dark orange. While the chance of loan defaults in the major banks' domestic market is lower, OSFI expects financial institutions to prepare for the riskier U.S. market. Office buildings account for a small portion of lending portfolios at the major banks.