The OCC issued a bulletin on how banks treat guarantor support when assigning risk ratings to commercial credits.
Details: The OCC said the bulletin:
-
Provides background information about credit risk ratings.
-
Emphasizes that credit risk ratings are based on the specific facts and circumstances of the credit.
-
Emphasizes that credit risk mitigation provided by guarantor support can result in a range of outcomes depending on the circumstances.
-
Explains how guarantor capacity and willingness are considered when assigning a credit’s risk rating.
-
Discusses types of guarantees and how characteristics of each can affect the extent of credit risk that is mitigated by guarantor support.