Large Bank Supervision Forum 2023

The 2013 Guidance Independent Credit Review

55  First assure bank policy is current and meets guidelines and is consistent within the banks overall risk framework. Then assure practice is inline with policy. 55 For financial professional or qualified institutional investor use only. Not for inspection by, distribution or quotation to the general public. Regulator Concerns  There is no independent review of leveraged loans by qualified bankers experienced with leveraged lending  Independence in escalating elevated risks Best Practices  Engage independent review function outside the bank.  If internal, that function is staffed with experienced banker(s) who report independently to executive management  The loan review function is aware of regulator expectations in leveraged lending

The 2013 Guidance Stress Testing

Regulator Concerns  None done at all, or done on a static, generic methodology  Not enough scenarios or variance is not consistent with environment Best Practices  Multiple scenarios  Updated quarterly  Tests are specific to borrower and test key operating vulnerabilities  Be consistent with complexity of portfolio and credit

For financial professional or qualified institutional investor use only. Not for inspection by, distribution or quotation to the general public.

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