Circular
Credit Quality of Shared National Credit Portfolio Improved in 2010
September 28, 2010
Circular No. 12247

The credit quality of large loan commitments owned by U.S. bank organizations, foreign bank organizations (FBOs), and nonbanks remained weak in 2010, but improved from 2009, according to the Shared National Credits (SNCs) Review for 2010.

The SNC program was established in 1977 to provide an efficient and consistent review and classification of SNCs, which includes any loan or formal loan commitment, and any asset such as real estate, stocks, notes, bonds and debentures taken as debts previously contracted, extended to borrowers by a federally supervised institution, its subsidiaries and affiliates that aggregates to $20 million or more and is shared by three or more unaffiliated supervised institutions. Many of these loan commitments are also shared with FBOs and nonbanks, including securitization pools, hedge funds, insurance companies and pension funds.

In conducting the 2010 SNC Review, agencies reviewed $1.0 trillion of the $2.5 trillion credit commitments in the portfolio. The sample was heavily weighted toward non-investment grade and criticized credits. The results of the review are based on analyses prepared in the second quarter of 2010 using credit-related data provided by federally supervised institutions as of December 31, 2009, and March 31, 2010.

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