LOS ANGELES, Oct 8: The Sept 11 terrorist attacks only worsened the already serious loan and default problems for the US banks.

According to a survey by regulators in May and June, released last week, the weak economy was already compounding things for America’s financial sector with rising losses and mounting bad portfolios before the attacks due to the dot-com crash and a subsequent Wall Street slide.

Currently, the biggest at risk, according to the Federal Reserve’s survey, are the so-called syndicated loans of more than $20 million to corporate customers, made by groups of three or more banks, which team up to limit their risks on any given loan.

Analysts suggest as much as $193 billion or 9.4% of total syndicated loans are at risk of default. That compared with $99.5 billion, or 5.2% of all loans, a year earlier.

Bank stocks tumbled last Friday under a cascade of bad news as a big lender to airlines said it was hiking provisions for losses by $1 billion because of the Sept 11 terrorist attacks, while federal regulators reported a near-doubling of troubled loans to large corporate borrowers.

Most banks already have beefed up reserves for losses on loans to manufacturers, technology firms, utilities and airlines, regulators said. Whether those reserves will be enough remains an open question.

Although the banking industry, overall, was in a strong financial shape before the attacks, yet it had sent bankers back to reassess many loans.

A recent projection by the United States’ 8th largest bank - Bancorp - was grim as the bank expects a combined $1 billion in loan charge-offs and added reserves to cut third-quarter earnings by $655 million after taxes.

“After Sept 11, we asked our people to re-evaluate all sectors we have exposure to,” including $700 million in loans and leases to airlines, said David M. Moffett, chief financial officer of the Minneapolis-based bank.

Moffett said Bancorp’s decision to boost reserves was based on projections of an economic recession in the third and fourth quarter of this year and the first quarter of 2002, with a slight pickup in spring of next year and more robust growth in the second half.

Meanwhile, Standard & Poor’s index of 23 major banks fell 5.1% last week.

US Bancorp’s warning came on the heels of Goldman, Sachs & Co. downgrading of stocks of four smaller regional banks.