A Federal Reserve Board survey has found that most banks are carefully scrutinizing whether their corporate customers have fixed any year-2000 problems.

Of the 60 big banks queried, 100% incorporated checks for year-2000 problems in their underwriting standards and 95% incorporated them in their loan review policies.

Half the banks said they have reviewed more than 95% of their business customers for millennium bug problems, and 24% said they scrutinized at least three-quarters of their corporate borrowers. Only one bank had reviewed less than 50% of borrowers for year-2000 compliance.

Banks apparently are satisfied with year-2000 compliance efforts. Only one bank said it had rejected borrowers "many times" because of year-2000 worries and 16 refused to extend credit "a few times," the Fed said in its quarterly senior loan officer survey. The rest "rarely or never" rejected loans for this reason.

More generally, the Fed said only 10% of banks polled tightened business loan underwriting standards during the last three months. The rest left them unchanged. Few banks saw an increase in demand for business loans.

Banks generally tightened underwriting standards for commercial real estate and credit card lending. Standards and terms on consumer loans were unchanged.

Paul M. Dorfman, executive vice president at Bank of America and immediate past president of Robert Morris Associates, said the year-2000 data is not surprising. Banks are finding that most companies are prepared, he said.

Still, he predicted banks would suffer some year-2000 losses.

"Some of the fears have been overblown," Mr. Dorfman said. "Yet there are companies out there who believe they have dealt with the problem and answered all our questions correctly, but they may not be ready."

For customers that are not year-2000 compliant, half the banks said they are placing covenants in loans requiring computers to be fixed before Dec. 31. The remaining banks were split between those requiring covenants for new loans only and those not using this mechanism at all.

Lee B. Murphey, chief credit officer at First Liberty Bank, Macon, Ga., said covenants make sense unless the bank decides it will not drop the customers regardless of year-2000 readiness.

"Banks who are not doing the covenants in the loan agreements are probably saying, 'It won't do me any good anyway, because the loan is well- secured and the company has the financial wherewithal to get through this problem,'" he said.

Few banks have received requests for lines of credit tied to year-2000 contingency planning, though just under half of those surveyed said they anticipate between a "moderate" and a "substantial" number of requests in the coming months.

Nearly all the banks said they were willing to extend these credit lines, but half said they would give credit only to existing customers.

Of banks willing to extend lines of credit, 20% plan to charge 11 to 25 basis points more than normal, while 10% plan to charge 25 to 50 more. The rest either will not charge more or will charge less than 10 basis points.

Banks said borrowers primarily are seeking more credit to boost inventories in the weeks before Jan. 1.

"I anticipate a step up in usage of lines that are in place right now to finance inventory," said Dorothy M. Horvath, chief credit officer at National City Corp. "For many companies, one of their contingency plans is to ensure there is no disruption in their inventory so they can continue making sales."

The 60 banks surveyed hold $2.2 trillion of assets, which is nearly half the total held by all U.S. commercial banks.

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