Leveraged Lending

Risk Management Guidelines and Controls

All banks engaging in leveraged lending activities should state in writing their risk objectives, underwriting standards, and controls as part of their overall credit risk management process and policies. The lack of robust risk management processes and controls in banks with significant leveraged lending activities is an unsafe and unsound banking practice. The bank’s loan policies should avoid compromising sound banking practices in an effort to broaden market share or generate substantial fees.

Previous: Strategic Risk Next: Loan Policy