January 25, 2019

US Agencies (OCC, FED, and FDIC) jointly released a report that presents the results of the 2018 reviews covering Shared National Credit (SNC) loans originated by or before March 31, 2018. The review finds improvement in credit quality and increased risks associated with leveraged lending. The agencies remind banks to update credit risk management practices as the risk profile of borrowers and the industry changes.

Federal banking agencies find that risk in the portfolio of large syndicated bank loans has declined, due to improving conditions in most sectors. Despite the improvement, the dollar volume of loans rated below "pass," as a percentage of total loans, remains elevated compared with levels experienced in prior economic cycles, according to the Shared National Credit (SNC) Program Review. The 2018 SNC portfolio included 8,571 credit facilities to 5,314 borrowers, totaling USD 4.4 trillion, up from USD 4.3 trillion in 2017. U.S. banks held the greatest volume of SNC commitments at 44.3% of the portfolio, followed by foreign banking organizations and other investor entities such as securitization pools, hedge funds, insurance companies, and pension funds. Effective January 01, 2018, the agencies increased the minimum aggregate loan commitment threshold to be included in the review from USD 20 million to USD 100 million. Under the revised definition, loan commitments increased modestly compared with levels reported in 2017. The number of borrowers and credit facilities, however, has declined.

The SNC Program is an interagency review and assessment of risk in the largest and most complex credits shared by multiple regulated financial institutions. SNC reviews are completed in the first and third quarters of the calendar year, with some banks receiving two reviews and others receiving a single review each year. The results discussed in this document are based on examinations conducted in the first and third quarters of 2018. Trends and exhibits shown in the report include data submitted by all reporting banks. Although some banks are examined twice a year, the agencies will continue to issue a single statement annually that captures combined findings from the previous 12 months. The next statement will be released on completion of the third quarter 2019 SNC examination.

 

Related Links

Keywords: Americas, US, Banking, Credit Risk, SNC Loans, US Agencies

Related Articles
News

US Agencies Consult on Capital Treatment of Land Development Loans

US Agencies (FDIC, FED, and OCC) issued a proposed rule on the treatment of loans that finance the development of land for purposes of the one- to four-family residential properties exclusion in the definition of high volatility commercial real estate (HVCRE) exposure in the regulatory capital rule.

July 12, 2019 WebPage Regulatory News
News

EBA Single Rulebook Q&A: Second Update for July 2019

Under the Single Rulebook question and answer (Q&A) updates for this week, EBA published answers to five questions related to supervisory reporting.

July 12, 2019 WebPage Regulatory News
News

ESMA Updates Manual for European Single Electronic Format in EU

ESMA updated the reporting manual for European Single Electronic Format (ESEF).

July 12, 2019 WebPage Regulatory News
News

FED Updates Supplemental Instructions for Reporting Form FR Y-9C

FED updated the supplemental instructions for FR Y-9C reporting.

July 12, 2019 WebPage Regulatory News
News

EBA Publishes Report on Monitoring Implementation of LCR in EU

EBA published its first report on the monitoring of the implementation of liquidity coverage ratio (LCR) in EU.

July 12, 2019 WebPage Regulatory News
News

APRA Applies Additional Capital Requirements to Three Australian Banks

APRA is applying additional capital requirements to three major banks in Australia to reflect higher operational risk identified in their risk governance self-assessments.

July 11, 2019 WebPage Regulatory News
News

IMF Report on 2019 Article IV Consultation on Euro Area Policies

IMF published its staff report in context of the 2019 Article IV consultation on euro area policies with member countries.

July 11, 2019 WebPage Regulatory News
News

FSB to Survey Practices on Cyber Incident Response and Recovery

FSB launched a survey on the industry practices on cyber incident response and recovery.

July 11, 2019 WebPage Regulatory News
News

ECB Appoints New Members of Supervisory Board

The Governing Council of ECB appointed Edouard Fernandez-Bollo, Kerstin af Jochnick, and Elizabeth McCaul as representatives to the Supervisory Board of ECB Banking Supervision, for a five-year non-renewable term.

July 11, 2019 WebPage Regulatory News
News

OSFI Consults on Applying Proportionality to Pillar 1 Rules in Canada

OSFI published a discussion paper seeks input on possible tailoring of the capital and liquidity requirements for small and medium-size deposit-taking institutions.

July 11, 2019 WebPage Regulatory News
RESULTS 1 - 10 OF 3435