Australian Prudential Regulation Authority chairman John Laker named commercial property lending as the focus of the regulator's current credit quality concerns.In a speech yesterday to the AB+F Leaders Lecture Lunch in Sydney, Laker highlighted commercial property exposures as the main source of bank asset impairments. He described the problem as "an echo of the 1990s recession".His comments came as Bank of Queensland an increase of a $97 million in impaired commercial assets (see item above). Other institutions known to have had problems in their commercial property portfolios in recent times include Investec, Suncorp and the Australian arm of Lloyds.Reserve Bank of Australia deputy governor Ric Battelino said in October that foreign banks and small banks were over-exposed to commercial property lending. Laker may have been referring to the same groups yesterday when he said that commercial property lending had been an avenue for rapid asset growth by 'new' lenders. The lead-up to the crisis had seen lenders finance riskier development and "obviously, some fingers got quite burnt in this area".The APRA chair also noted the crisis had overturned the previous belief that a foreign parent would be a source of support, showing it could be instead a source of stress.Laker said APRA's "thematic review" of credit quality in commercial property lending now aimed to strengthen risk management practices. He said a team of APRA credit risk specialists was assessing:* the risk appetite and business strategy of each deposit-taking Institution active in this line of business;* underwriting standards and the quality of the origination process;* portfolio limits on such lending and the rationale for any recent changes to limits;* the quality of internal management reports on the performance of the portfolio; and* the rigour of stress-testing applied to the portfolio, particularly by geographic area.APRA was also examining credit standards in housing lending, and there had been "some earlier signs of aggressive lending at high loan-to-valuation ratios," Laker said.Australia's economic resilience had limited losses from corporate and SME lending, but APRA was closely monitoring ADI "watchlists", large exposures and industry concentrations.Lending overall had performed quite well during the crisis, Laker said, with banks' non-performing loans less than two per cent of assets compared to well over six per cent at times in the early 1990s downturn.Banking institutions were now "clearly moving out of defensive mode", with strong economic growth providing a "very sound operating environment" for them.