Regulatory Alerts2012-03-22
Limitations on Financing Capital Transactions
The Supervisor of Banks issued Directive 323-1 to establish quantitative limits on credit extended for capital transactions, supplementing existing leveraged lending management rules. The regulation caps total credit balances exceeding 50 percent financing at 70 percent of the banking corporation's capital, with stricter 5 percent limits applying to acquisitions of other banking entities. Banks are required to perform quarterly adjustments of these limits and aggregate credit extended to multiple borrowers for the same corporate acquisition.
Share