WASHINGTON — Financial firms that share syndicated loans worth $20 million or more have seen their losses ease from such commitments, according to an annual government review released Tuesday.
The 2010 Shared National Credits Review said syndicated credits shared by at least three unrelated institutions were criticized less often than last year. Overall, 18% of all shared national credits were criticized, a drop from more than 30% in 2009.
The amount of loans classified as a "loss" also fell, dropping 72% to $15 billion, the report said.
"Reasons for improvement included improved borrower operating performance, debt restructurings and bankruptcy resolutions, and improved borrower access to bond and equity markets," the regulators said in a press release. "Industries contributing to improvement in credit quality included automotive, materials and commodities, and finance and insurance."
Typically, SNC loans include those of over $20 million that are shared by three or more unaffiliated organizations, including U.S. and foreign banks and nonbanks.
The report said total SNC commitments fell 12.6% to $2.5 trillion. Overall, outstanding SNC loans decreased 22.5% to $1.2 trillion.
Criticized assets totaled $448 billion, a $194 billion drop from last year. Classified assets decreased $142 billion to $305 billion.
Special mention credits, which exhibit potential weakness and could result in further deterioration, declined to $143 billion and represented 5.7% of the SNC portfolio, compared with 6.8% in 2009.
The report said nonbanks, such as securitization pools, held the largest volume of classified credits at $161 billion, while still owning the smallest share of commitments.