Regulatory Alerts2013-02-01
Added · Updated
Errata: 905 Loan Limitations: Credit Exposure to Derivative Transactions
The State Bank Commissioner adopts Regulation 905 to establish rules for calculating credit exposure arising from derivative transactions for determining bank loan limitations under Section 909 of Title 5 of the Delaware Code. The regulation defines key terms and mandates that banks calculate credit exposure using one of three methods: the Internal Model Method, the Conversion Factor Matrix Method, or the Remaining Maturity Method, with specific calculation formulas and tables provided for each. Intraday credit exposures are exempt from these lending limits, and increases in exposure after transaction execution are treated as nonconforming loans rather than violations if reasonable efforts are made to restore conformity. This errata corrects the inadvertent omission of the final regulation from the January 1, 2013 publication, maintaining the effective date of January 11, 2013.