FED adopted the proposal to extend for three years, without revision, the recordkeeping provisions associated with guidance on leveraged lending (FR 4203; OMB No. 7100-0354). FED did not receive any comments to the related consultation, the comment period for which expired on September 03, 2019. The reporting frequency of FR 4203 is occasional and there are no reporting forms associated with this information collection.
The guidance outlines high-level principles related to safe-and-sound leveraged lending activities. The guidance includes a number of voluntary recordkeeping provisions that apply to financial institutions engaged in leveraged lending activities, for which FED is the primary federal supervisor; these financial institutions include bank holding companies, savings and loan holding companies, state member banks, and state-chartered branches and agencies of foreign banks that engage in such activities. The guidance states that institutions should maintain:
- Well-defined underwriting standards that, among other things, define acceptable leverage levels and describe amortization expectations for senior and subordinate debt
- Sound management information systems that enable management to identify, aggregate, and monitor leveraged exposures and comply with policy across all business lines
- Strong pipeline management policies and procedures that, among other things, provide for real-time information on exposures and limits and exceptions to the timing of expected distributions and approved hold levels
- Guidelines for conducting periodic portfolio and pipeline stress tests to quantify the potential impact of economic and market conditions on the institution's asset quality, earnings, liquidity, and capital
Many community banks are not subject to the guidance because they do not engage in leveraged lending. The limited number of community and smaller institutions that are involved in leveraged lending activities may discuss with FED how to implement these collections of information in a manner that is appropriate for the complexity of their exposures and activities. The estimated number of respondents for this information collection is 40.
Related Link: Federal Register Notice
Keywords: Americas, US, Banking, FR 4203, Leveraged Lending, Information Collection, Credit Risk, Reporting, FED
Previous ArticleFASB Issues Summary of Tentative Board Decisions at October Meeting
HKMA proposed amendments to the Supervisory Policy Manual, or SPM, module CA-B-2 on systemically important banks.
FSB published the annual report that examines to-date progress toward implementation of climate-related disclosure recommendations of the industry-led Task Force on Climate-related Financial Disclosures (TCFD).
EBA proposed to revise the guidelines on sound remuneration policies in light of the amendments introduced by the fifth Capital Requirements Directive (CRD V).
US Agencies (FDIC, FED, and OCC) finalized two rules, which are either identical or substantially similar to the interim final rules in effect and issued earlier this year.
EBA published the first monitoring report that examines the issuance and quality of the minimum requirement for own funds and eligible liabilities (MREL) and the total loss-absorbing capacity (TLAC) instruments in EU.
FSB's Task Force on Climate-Related Financial Disclosures (TCFD) is seeking views on the decision-useful, forward-looking climate metrics for firms in financial sector, with the consultation ending on January 27, 2021.
APRA is consulting on the reporting standard for credit risk management (ARS 220.0).
PRA launched a consultation (CP18/20) setting out proposals for the "Contractual Recognition of Bail-in" and "Stay in Resolution" Rules.
BoE and PRA launched a package of proposals on the resolution policy in UK.
ECB published an opinion (CON/2020/25) on the deposit guarantee scheme and other amendments to the financial services legislation.