Oct 22 (Reuters) - U.S. banks' loans to private credit

providers have surged to nearly $300 billion, Moody's said in a

report on Tuesday, and the ratings agency warned that smaller

lenders could face heightened risks if underwriting standards

weaken.

Loans to non-depository financial institutions (NDFIs) are

now 10.4% of total bank loans, nearly three times the 3.6%

exposure a decade ago, the report said. The aggressive growth

outpaced all other lending activities since 2016, it added.

Investors have been concerned about wider strains in the

financial sector after some regional banks, including Zions

Bancorp, flagged bad loan and alleged fraud issues in

recent weeks.

Besides exposure to private credit providers, there was

a further $285 billion in loans to private equity funds as of

June, and $340 billion in unutilized commitments available to

these borrowers, Moody's said.

Analysts see the recent episodes as idiosyncratic events

rather than a systemic concern in credit quality. Top banking

executives have also downplayed the risk in private lending.

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