Alert December 20, 2011

OCC Updates Guidance on Concentrations of Credit

The OCC revised and restated the guidance it provides in its Handbook entitled “Concentrations of Credit“ (the “OCC Guidance”).  Among other things, the OCC Guidance: (1) expands the framework for identifying potential credit concentrations; (2) expands the definition of “credit concentration” to encourage banks and examiners to consider “more than just the dollar amount of exposure”; and (3) emphasizes the importance of stress testing in identifying and quantifying credit concentration risks.