FRANKFURT, Feb 16 Reuters An investorturnedshort seller in Germany39;s embattled Pfandbriefbank on Friday told the company to come clean on the extent of its problem realestate loans or risk being sucked into a downward spiral.

Petrus Advisers went from holding a nearly 3 stake in PBB a year ago to becoming one of a number of financial firms now betting against it. Public filings show short sellers are increasing their positions against the bank, one of Germany39;s biggest property financiers.

Till Hufnagel, partner with Petrus, told Reuters PBB needs to raise capital and get rid of nonperforming loans by facing this outright.

PBB declined to comment on Petrus and other short sellers, which are cumulatively making bets against more than 8 of PBB39;s stock, aiming to make a profit as its shares drop sharply.

But the company, which has lent billions, including for offices in the United States or Germany, rebuffed criticism on Friday that it was dragging its feet in facing up to the turn in the property market.

Banks in Europe have about 1.4 trillion euros in loans to the commercial property industry, with lenders in Germany, France and the Netherlands the most exposed to the sector.

The attention from short sellers will increase public pressure on PBB, which this week had its stock and bonds pummelled and its credit rating downgraded to near junk, showing how investors are concerned about weakness in realestate markets on both sides of the Atlantic.

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