Commercial credit underwriting standards eased over the past year, OCC survey finds

By Sara Rosenberg

New York, July 28 - Commercial credit underwriting standards have eased for syndicated/national, structured finance, asset-based, and international loan-lending activities over the past year, according to the 11th annual Survey of Credit Underwriting Practices conducted by The Office of the Comptroller of the Currency.

The survey found that 34% of banks eased underwriting standard, 12% tightened and 54% did not change. By comparison, in 2004 only slightly more banks eased than tightened credit underwriting standards.

"Ambitious growth goals in a highly competitive market can create an environment that fosters imprudent credit decisions," said Barbara Grunkemeyer, Deputy Comptroller for Credit Risk, in a news release.

"Banks should be diligent to ensure risk management practices keep pace with new products, changing risk selection practices and underwriting standards, and emerging concentrations. Exceptions to underwriting standards need to be carefully controlled and monitored, and relationship and line of business managers must be held accountable for loan quality as well as loan volume."

The survey included the 71 largest national banks that have assets of $2 billion or greater and covered the 12-month period ended March 31.

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