Loan Losses Triple-Slam The Banks

The latest Fed data shows that syndicated loan losses for major banks tripled in 2009 to $53 billion.

Furthermore, “criticised Assets”, ie. those assets which are rated as bad loans at risk of loss (Special mention, substandard, doubtful, or loss) rose 72% in a single year to a whopping $642 billion. The result is that 22.3% of the loans now held by institutions under federal supervision carry the criticised designation (Shown in red below).

Clearly the bad loan situation remains extraordinary, with a mountain of bad debt in the system.

Guess your loss rate, multiply by $642 billion, and you can arrive at a very rough back-of-the-envelope estimate for future loan losses. This wouldn’t even include potential further deterioration for other loan assets.

Please find the full Annual Nation Credits Review below.

SNR Loan Data

 

SNR Fed Reserve

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