FIL-13-2013: Final Joint Guidance on Leveraged Lending

FDIC Subscriptions sent this bulletin at 03/27/2013 08:34 AM EDT

Financial Institution Letter

Final Joint Guidance on Leveraged Lending FIL-13-2013
March 27, 2013





Summary: The Federal Deposit Insurance Corporation, Board of Governors of the Federal Reserve System, and the Office of the Comptroller of the Currency are issuing the final guidance on leveraged lending activities. This guidance defines leveraged lending, addresses expectations for the content of credit policies, outlines the need for well-defined underwriting and valuation standards, and reinforces the importance of credit analytics and pipeline management for this type of lending. Guidelines for the purchase of participations involving leveraged loans also are included.

Statement of Applicability to Institutions With Total Assets Under $1 Billion: This Financial Institution Letter applies to all FDIC-supervised banks and savings associations, including community institutions. However, the majority of community institutions should not be affected by this guidance as they have limited exposure to leveraged credits. FDIC-supervised community institutions that engage in leveraged lending activities should discuss with the FDIC implementation of cost-effective controls appropriate for the complexity of their exposures and activities.

 

Distribution:
FDIC-Supervised Banks (Commercial and Savings)

Complete Financial Institution Letter: http://www.fdic.gov/news/news/financial/2013/fil13013.html

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