Regulation of Legal Lending Limits

(a) Date of calculation. In order to determine compliance with 12 U.S.C. 84 and 12 U.S.C. 1464(u), as the case may be, and this Part, a national bank or savings association must determine its credit limit on the later of: In order to implement the requirements of Section 610 of the Dodd-Frank Act, the definition of “loans and loan extensions” in section 32.2 has been amended to include certain credit risks arising from a derivatives transaction. or a securities financing transaction, i.e. a reverse repurchase agreement, reverse repurchase agreement, securities lending transaction or securities borrowing transaction. The provisional final rule defines `derivative transaction` as any transaction that is a contract, agreement, swap, warrant, debt security or option based in whole or in part on the value of an equity or quantitative measure or on the occurrence of an event relating to one or more commodities, securities, currencies, interest rates or other interest rates. Indices or other assets. The OCC disagrees that the credit limit rule should exclude credit exposure to CCPs or CCP guarantee funds, as these exposures are concentrated.

Credit limits are designed to prevent excessive concentration of credit risk in one party, including an institution`s credit risk relative to CCPs. In addition, the application of the rule to such credit exposures is unlikely to result in an institution`s exposures to a borrower reaching the legal limit of the institution if banks are allowed to use models to measure their exposure to CCPs and if the prudent credit risk management practices of clearing member banks are applied. To clarify how banks and savings banks should measure counterparty risks vis-à-vis CCPs, we have added a new section 32.9(b)(3). This new provision provides that, in addition to the amount calculated in accordance with Article 32.9(b), the measure of exposure to a CCP includes the sum of the original margin recognised plus any contribution to a guarantee fund at the time of deposit, unless it is already taken into account in the calculation. This new provision is generally consistent with the interpretative positions of the CCO. [29] However, the OCC recognises that the role of CCPs in the domestic and international financial sector is dynamic and that there are uncertainties about the evolution of this role, in particular given the role assigned to central clearing houses by the Dodd-Frank Act and the choice of the bank`s or savings association`s client to use certain CCPs. [30] As a result, the OCC will continue to monitor the role of CCPs and, if necessary, review our credit limit rule for exposures to these entities. In the case of SFTs, the calculation of credit risk using the non-standard methodology of the provisional final schedule shall be based on the nature of the HST concerned. The Office of the Comptroller of the Currency (OCC) is finalizing its interim final loan agreement with revisions. The interim final rule consolidated credit cap rules for domestic banks and savings associations, removed the OCC`s separate credit limits regulation for savings associations, and implemented Section 610 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which amends the legal definition of “credit extensions and loan extensions” to include certain credit risks arising from derivative transactions.

Repurchase agreements, reverse repurchase agreements, securities borrowings and securities borrowing transactions. The legal credit limit cannot exceed 15% of a bank`s own funds and surplus for an individual borrower. If the borrower takes out a secured loan, the bank can lend up to 25% of its capital and surplus. Examples of loans with special credit limits are loans secured by bills of lading, inventory receipts and certain other loans. (2) If the Landesbank or the Sparverband subsequently decides to grant an additional loan and this follow-on loan, together with all outstanding loans and qualified liabilities to a borrower, exceeds the credit limit of the bank or savings association applicable at that time, the qualified obligations of the bank or savings association to the borrower that exceed the credit limit of the bank or association Savings at that time apply: as permanently disqualified. starting with the last qualifying commitment and in reverse chronological order.