Fed Report Surprises on Syndicated Loans' Risk
American Banker (08/28/00) Vol. 104, No. 34 p.1; Garver, Rob

A Federal Reserve Board report released Friday stated that syndicated portfolios at many large U.S. banks are less risky than their loans to individual borrowers. The Fed's quarterly poll of senior loan officers asked 56 domestic banks and 22 U.S. branches of foreign banks to describe their syndicated loan holdings and the quality of their portfolios. Eighty-six percent of domestic banks said that the default rates for the syndicated loans they hold are equal to or lower than those for loans to individual borrowers. Meanwhile, bank trade groups said that results prove that recent credit quality fears have been exaggerated. According to the Fed survey, U.S. bank participation in the syndicated loan market is more frequent among large institutions. The survey revealed an overall net tightening of credit standards for loans to businesses. However, credit standards for consumer lending and residential mortgages were unchanged from the last survey.


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