On March 21, 2013, federal bank regulators released final interagency guidance on leveraged lending. This alert provides an overview of the guidance and highlights certain differences between the final version of the guidance and the draft version that was proposed in 2012. For more information, please click here.
leveraged lending
Agencies Issue Updated Leveraged Lending Guidance
On March 21, the Fed, FDIC and OCC released updated supervisory guidance on leveraged lending which covers transactions characterized by a borrower with a degree of financial leverage that significantly exceeds industry norms. The guidance applies to financial institutions supervised by the agencies that engage in leveraged lending activities and focuses on: (i) establishing a sound risk-management framework; (ii) underwriting standards; (iii) valuation standards; (iv) pipeline management; (v) reporting and analytics; (vi) risk rating leveraged loans; (vii) participants; and (viii) stress testing. Joint Release.