Large, small banks differ in TARP needs-survey

PHILADELPHIA, Nov 7 (Reuters) - The banks participating in the U.S. government's plan to buy soured financial assets have different needs, with commercial real estate and other property assets having the greatest impact on smaller institutions, according to an industry survey released on Friday.

Five financial trade associations polled the views of more than 400 companies on the U.S. Troubled Asset Relief Program (TARP) and found that large and small institutions had different needs in terms of the assets they want to sell and the prices they need to get.

"This survey provides some meaningful direction on where regulators' tools might be targeted to be most effective," said Tim Ryan, president and chief executive of the Securities Industry and Financial Markets Association.

Overall, the financial institutions said whole loans and securities should get roughly equal priority under the TARP program, but large and small companies have some different needs, the survey found.

The firms surveyed said that 50 percent to 60 percent of their assets are related to residential real estate, and include whole loans and securities.

The institutions polled would prioritize the purchase of mortgages given to people with bad credit and certain other real estate loans, followed by commercial real estate, the survey found.

Smaller firms cited commercial real estate and other real estate or property owned as the assets most necessary to be unloaded under the TARP program, while larger institutions cited corporate loans and collateralized debt obligations (CDOs). CDOs are an investment-grade security backed by a pool of bonds, loans and other assets.

Small institutions would require assets being acquired close to their actual cost, rather than at a discount.

"This survey illustrates the wide array of activities that ought to be undertaken through TARP," said John Courson, chief operating officer of the Mortgage Bankers Association. (For more M&A news and our DealZone blog, go to here) (Reporting by Jessica Hall; editing by Jeffrey Benkoe)