On Aug. 5, Basel issued newsletter on credit risk related matters.
Basel issued newsletter on credit risk focused on real estate and leveraged lending.
Overview
Committee issued newsletter to provide greater detail on internal discussions re credit risk issues as may be useful for both supervisors and banks in day-to-day activities.
For information purposes, does not constitute new supervisory guidance/expectations.
Key Aspects
The pandemic and recent inflation have heightened credit risk concerns, with the Committee focusing on risks in real estate and leveraged loan markets.
It is important for banks to keep prudent risk management practices on real estate and leveraged loans, as supervisors observed higher risk lending, deficient practices.
Supervisory authorities responded to increased risks through heightened supervision.
Deep-dive reviews, use of certain macroprudential tools, to continue using combination of supervisory activities to ensure effective management of credit risk by banks.
Committee will continue to monitor banks' risk management practices and exposures to real estate and leveraged loans/collateralized loan obligations; more details.
Informs of supervisory workshops with private sector participants, bank supervisors on real estate, leveraged loan markets; focused on risks and vulnerabilities.
Also on supervisory perspectives and practices in various jurisdictions; more details.
