National banks will be able to give investors and shareholders more complete details about bad loans under a new plan to be released this week.
Bankers say the new rules will let them provide a more accurate picture of their loan problems and perhaps ease anxiety about the banking industry.The Office of the Comptroller of the Currency, which regulates 4,200 nationally chartered banks, is expected to issue guidelines for disclosure on non-accruing loans, said agency spokesman Dean DeBuck.
Those are loans that haven't been written off as bad debts, but still are considered problems. They are defined as loans that aren't well secured, where full payment isn't expected or interest payments are more than 90 days late.
Problem loans are on the rise nationally as real estate values have plummeted following heavy lending by banks for commercial real estate projects in the 1980s.
By Sept. 30, 1990, $47 billion of $1.2 trillion in loans at national banks were classified as non-current, a wider definition that includes loans which are past due, the comptrollers office reported. Statistics for non-accrual loans were not available.
Under the proposal, banks can break the non-accrual loans into three categories: loans that aren't being paid in full but are returning about 85 percent of the agreed interest and payment; loans providing some income; and loans providing none at all.
Under current regulations, bank examiners corral all non-accrual loans together, and bank officials contend it portrays an excessively grim picture of a bank's earnings.
The new rating system won't change how some securities analysts rate banks.