Transactions With Affliates Flashcards
What is a covered transaction
Extension of credit to an affliate
Purchase of affliate security
Purchase of affliate asset
Securiiry of an affliate offered as collateral
What are low quality assets
Substandard assets
Non accrual
30 days past due
Assets acquired via foreclosure
Maximum covered for a transactions for a single affliate may not exceed
10% of the capital stock and surplus of the bank
Maximum amount of covered transaction for all affiliates can not exceed
20% of bank capital and surplus
What is the covered transactions measurements for a savings and loan
Unimpaired capital and unimpaired surplus
The collateral requirements in credit transactions with affliates are
100% if collateral consists of US backed notes
110% if obligation of state
120% if collateral is other debt obligations
130% if obligation is stock , leases, or real property
What type of items are not allowed to be used as collateral
Low quality assets
Securities issued by any affiliates
Letters of credit
Guaranteed
Intangible assets
What does section 23 a require
Banks maintain a security interest I collateral
What must banks do when collateral is amortized or retired
It is replaced by additial Eli globe collateral equal to the percentage required at the inception of the transactions
Can a bank purchase low quality assets from an aft
No unless it is performed under an independent credit evaluation
Can a bank renew low credit assets to an affliate
Yes if the loan was not a low quality asset at the time the bank purchased the participation
It was approved by the board to protect the banks interest
The bank provides its primary regulatory agency with written notice of renewal not later than20 days after consummation
What must a credit transaction with an affliate be valued at
The principal amount of the transaction
The amount owed by the affliate to the bank
When does a bank engage in a credit transaction with an affliate
At the time during the day it
Becomes legally obligated to lend to, issue a guarantee, or confirm a letter of credit for an affliate
Does the 10% rule apply to transactions between a bank and a financial subsidiary
No nor does th 20% on all affliates
What is section 24 a
Imposes safeguards to protect banks from misuse of their resources in transactions with affliates
What is section 23b
Govern transaction among banks and non affliates by requiring transactions between banks and their affliates to be on comparable terms and conditions as transactions with non affliates
What is the attribution rule
Proscribes that any transaction with a third party is considered to be a transaction with an affliate to the extent the proceeds of the transaction benefit of the third party
What are some examples of what is subject to reg w
Loan or extension to an affliate
Purchasing assets from an affliate
Accepting collateral or purchasing securities of an affliate
Guarantee letter of credit
Tax allocation agreements
Contributing to a depository institution an affliate that has outstanding debt
Entering into serious tea and securities financing transactions that result in credit exposure
Can an individual be an affliate of a bank
No
What is the sister bank exception
Sister banks are only subject to the low quality asset and safety and soundness requirements
