OCC Official Says Syndicated Loans Suffered Decline

By Steven Sloan



Regulators are poised to release data this week pointing to a record number of syndicated loans experiencing a decline in credit quality. The proportion of classified loans — those that regulators deem substandard, doubtful or a loss — nearly tripled over the past year to 15.5% of the industry’s total syndicated loan portfolio, according to Kathy Murphy, the chief accountant at the Office of the Comptroller of the Currency. Add in a fourth category of shaky loans and 22.3% of the industry’s syndicated business worth roughly $600 billion is termed criticized, up from 13.4% a year earlier. “It will reinvigorate the regulatory effort to improve coordination and governance of the syndicated loan market,” said Karen Shaw Petrou, the managing director of Federal Financial Analytics Inc. “The regulators tried a significant initiative years back to ensure consistent policy among the agencies and they got beaten back. But I think you’ll see that become another piece of rewriting the credit risk rules that’s going to come back onto the agenda.”