The Board of Governors of the Federal Reserve System (FED) is seeking comments, until November 14, 2022, on a proposed policy statement for prudent commercial real estate loan accommodations and workouts. The proposed statement will be applicable to all financial institutions supervised by the FED.
The proposed statement builds on existing guidance on the need for financial institutions to work prudently and constructively with creditworthy borrowers during times of financial stress, to update and expand the existing interagency guidance on commercial real estate loan workouts, and to add a new section on short-term loan accommodations. The proposed statement would also address recent accounting changes on estimating loan losses and provide updated examples of how to classify and account for loans subject to loan accommodations or loan workout activity. The proposed statement is identical to a proposal issued by the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and the National Credit Union Administration (NCUA), on August 02, 2022, in consultation with state bank and credit union regulators.
The proposed statement discusses the importance of working constructively with commercial real estate borrowers that are experiencing financial difficulty and would be appropriate for all supervised financial institutions engaged in commercial real estate lending that apply U.S. generally accepted accounting principles (GAAP). While focused on commercial real estate loans, the proposed statement includes general principles that are relevant to a financial institution's commercial loans that are collateralized by either real property or other business assets of a borrower. Additionally, the proposed statement includes updated references to supervisory guidance and would revise language to incorporate current industry terminology.
Keywords: Americas, US, Banking, Commercial Real Estate, Credit Risk, Lending, GAAP, CRE, OCC, FDIC, NCUA, FED
The European Banking Authority (EBA) has published the final templates, and the associated guidance, for collecting climate-related data for the one-off Fit-for-55 climate risk scenario analysis.
The European Banking Authority (EBA) recently published a report that recommends enhancements to the Pillar 1 framework, under the prudential rules, to capture environmental and social risks.
As a follow on from its prudential standard on the treatment of crypto-asset exposures, the Basel Committee on Banking Supervision (BCBS) proposed disclosure requirements for crypto-asset exposures of banks.
The Basel Committee on Banking Supervision (BCBS) and the European Banking Authority (EBA) have published results of the Basel III monitoring exercise.
The Prudential Regulation Authority (PRA) recently issued a few regulatory updates for banks, with the updated Basel implementation timelines being the key among them.
The U.S. Department of the Treasury has recently set out the principles for net-zero financing and investment.
The European Commission (EC) launched a stakeholder survey on the draft International Guiding Principles for organizations developing advanced artificial intelligence (AI) systems.
The finalization of the two sustainability disclosure standards—IFRS S1 and IFRS S2—is expected to be a significant step forward in the harmonization of sustainability disclosures worldwide.
Decentralized finance (DeFi) is expected to increase in prominence, finding traction in use cases such as lending, trading, and investing, without the intermediation of traditional financial institutions.
The Basel Committee on Banking Supervision (BCBS) published reports that assessed the overall implementation of the net stable funding ratio (NSFR) and the large exposures rules in the U.S.