WASHINGTON - The volume of large syndicated loans criticized by federal examiners soared nearly 70% in this year's survey, to $63.3 billion, regulators said Tuesday.

It was the second increase in such troubled loans in as many years, after three years of steady decline. Despite the huge jump, total loan commitments grew just 6.4%.

"The message bankers should take away from this is that they should step back and ask themselves if they are making the loans they want to make, given that we are in a fantastic economy and classified loans are nearly doubling," said David D. Gibbons, deputy comptroller for credit risk at the Office of the Comptroller of the Currency.

The data are drawn from the Shared National Credit Program, an analysis undertaken every spring by the OCC, the Federal Reserve Board, and the Federal Deposit Insurance Corp. The program rates every loan commitment of $20 million or more that is shared by at least three regulated lenders.

Of $1.9 trillion in loan commitments surveyed, 3.3% fell into one of three categories - substandard, doubtful, or loss - that cover a range of problems, from inadequate collateral to outright default. In 1999, only 2.0% of the loans in the study were classified.

Regulators singled out an additional $36.3 billion of credits for "special mention" - meaning that they have troubling characteristics but have not been classified yet. In 1999, $31.4 billion of loans were so identified.

The changes from 1998 to 2000 provide an even more noticeable contrast. In 1998, regulators rated $1.8 billion worth of syndicated loans, representing 10,389 loans to 6,710 borrowers. Of those, only $22 billion of loans were classified, representing slightly more than 1% of total loans. Special mention was accorded to only $22.8 billion of loans.

"What we have here is a function of the excesses of the previous few years," Mr. Gibbons said. The amount of classified loans will continue to rise, as loans made under what regulators criticized as lax underwriting practices in 1997 and 1998 begin to go bad, he predicted. "The standards bankers have been exercising in their lending practices are starting to show up in their loan portfolios. The risk always precedes the problem," he said.

However, regulators do not expect the jump to be as dramatic next year.

In fact, Richard Spillenkothen, the Fed's director of banking supervision and regulation, warned against using the data to question the industry's health, which the Fed sees as sound. "While it deserves our attention overall we think it is important to keep it in perspective. We think the industry is very strong in terms of capital and earnings," he said.

In a press release issued with the data, the three agencies pointed out that the 3.3% of syndicated loans classified in this year's study falls well short of the 10% found in 1991.

In a discussion of the data that accompanied the release, regulators said that loans made to the healthcare industry continue to go bad at a higher rate than those in other sectors, and cited the leveraged borrowing that often follows an acquisition as a problem across all sectors.

The most marked increase in classified loans, though, occurred among those made to the financial services industry. The study classified $14.3 billion of these credits, up from only $3.6 billion in 1999. Regulators declined to specify reasons for the decreasing quality of loans to financial institutions.

The agencies reviewed 9,848 loan commitments to 5,844 borrowers, up 9.7% and 4.6% respectively from 1999. Only $701 billion of the $1.9 trillion cited in the study had actually been drawn down by borrowers when the data were collected. However, regulators said that the study looks at loan commitments that lenders are legally bound to fund, meaning that except in the case of default, they remain on the hook for the whole amount of the loan.

In classifying bad loans, regulators rate them as either substandard, doubtful, or loss. A substandard rating indicates that the borrower's ability to repay the loan or the value of the collateral has been compromised. A doubtful credit has all of the characteristics of a substandard loan, but to such a degree that the borrower's ability to repay in full has become "highly questionable and improbable." A loan classified as a loss is considered uncollectible.

In the 2000 review, regulators found not only an increase in the percentage of classified loans, but in their level of impairment as well.

Of the $63.3 billion in loans classified in 2000, 76% were judged to be substandard, 17% doubtful, and 7% uncollectible. In 1999, 83% were substandard, 13% doubtful, and only 4% were written off as a loss.

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