Alert January 17, 2012

OCC Issues Interpretive Letter Confirming that OCC Lending Limit Rule Regarding Sale of Loan Participations Does Not Require that the Sale of Participations Qualify as a Sale under Applicable Accounting Standards

The OCC issued an interpretive letter (OCC Letter No. 1134), in response to a request from the Wisconsin Bankers Association, in which the OCC confirmed that a national bank’s loan participations that satisfy the requirements of the OCC’s lending limit rule regarding the sale of loan participations at 12 C.F.R. §32.2(k)(2)(vi), (and accordingly are not deemed loans or extensions of credit for lending limit purposes) will qualify for lending limit relief even though the sale of the loan participations does not meet the requirements for “sale” treatment under applicable accounting standards (as currently set forth in Financial Accounting Standards No. 166, which amended FASB Statement No. 140).