Basel Real Estate, Leveraged Lending


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.

Regulators Basel
Entity Types B/D; Bank; Corp; HF; IA; Inv Co
Reference Bul nl29, 8/5/2022
Functions Exams; Financial; Market Conduct; Operations; Product Administration; Risk; Treasury
Countries Global Regulator
Category
State
Products Banking; Corporate; Equity; Loan
Regions Global
Rule Type Guidance
Rule Date 8/5/2022
Effective Date 8/5/2022
Rule Id 145038
Linked to N/A
Reg. Last Update 8/5/2022
Report Section International

Last substantive update on 08/05/2022