There will probably be more unpleasant surprises in bank loan portfolios before the recession is over.
Banks have taken a close look at their loan portfolios and turned white with fear.
The ultimate goal is that banks' capital should reflect the riskiness of their loan portfolios.
Also helping banks is improved credit quality as burdensome loan portfolios have been offloaded since early 2009.
McPeak and King said that rotations in loan portfolios over time are common through various business cycles.
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The 17 largest of them, according to the PBOC, expanded their loan portfolios by a stunning 34.9% that year.
In a rising rate environment, the government-sponsored organization could have to accept lower prices for its securitized loan portfolios.
Consider this one: The loan portfolios and the value of collateral held to cover lost loans continue to lose value.
Brazil reduced reserve requirements and gave banks and its deposit-insurance fund incentives to buy up the loan portfolios of smaller banks.
Malaysia and Korea wrecked their economies by allowing banks to increase loan portfolios even as the banks' own stock market values were sinking.
Strikingly, the Fed's loan-officer survey showed that 70% of respondents expect the quality of their credit-card and other consumer-loan portfolios to get worse.
How many hedge funds refuse to reserve sufficiently for potential litigation and repurchase risk for breaches of warranties and representations in their loan portfolios?
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Citigroup is also selling off or unwinding billions in consumer loan portfolios and shifting its mortgage focus to the highest end of the consumer market.
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This year, regulators required Chinese banks to maintain a reserve of 2.5% against the value of their total loan portfolios as provision for bad debt.
CreditMetrics attempts to apply these methods to loan portfolios as well.
The stocks of Chinese banks fell this year and were trading at price-to-book ratios that assumed these institutions would suffer substantial losses on their loan portfolios.
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Meanwhile, credit unions continue to push for Congress to approve an increase of their caps on commercial loan portfolios in order to offer more loans to local businesses.
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Despite their exposure to losses, Wall Street firms may end up on top when the dust settles by being able to snap up loan portfolios at a steep discount.
However, the initiative is an example of how the Administration and Congress could detrimentally affect future estimated cash flows and profitability from our FFELP Loan portfolios through their actions.
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Another scenario: The economy worsens, property owners miss debt payments, mortgage REITs are hit by defaults in their whole-loan portfolios, falling prices for junky commercial mortgage bonds and margin calls.
The pick of the bunch has been shares in the country's big banks, whose loan portfolios are so huge that they are, in effect, a leveraged play on the whole economy.
In addition to wanting to please client JPM, Deloitte would have been glad, for its own protection, to bury evidence that those two loan portfolios had errors necessitating borrower or investor compensation.
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But this is only half the picture: if it succeeded in ending deflation, the Bank of Japan would help to reduce banks' losses on their loan portfolios, which are bigger than those on their bond portfolios.
The meltdown of New Century Financial and troubles reported by other subprime residential mortgage lenders in recent weeks are prompting speculation that Wall Street firms will step in and buy the distressed companies or their loan portfolios.
My reasoning is based on the theory that either financial services firms get their loan portfolios cleaned up and in good shape so they generate earnings that further the recapitalization process or they struggle to stay alive.
Many financial observers anticipate further write-offs by U.S. banks, as they have not been forced to mark to market their entire loan portfolios, but have instead kept them on the books at their original prices or levels far higher than the current market.
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Some lenders are selling chunks of their distressed loan portfolios at a discount to companies who can then offer the borrowers steep loan modifications in an effort to avoid foreclosure although some of these will still end up as foreclosures down the line.
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In the way of background, I am an international banker by training, having served as a Vice President in the International Department of the Chase Manhattan Bank with responsibility for Chase's loan portfolios in the former Soviet Union, Eastern and Central Europe and Yugoslavia.
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