Oil and gas lending, credit risk-rating systems focus for Journal summer edition

Bank lending to the oil and gas sector, and an overview of bank credit risk-grading systems, are highlighted in two articles published in the summer edition of Supervisory Highlights Journal, published by the Federal Deposit Insurance Corp. (FDIC), the agency said Wednesday.

In a Financial Institution Letter (FIL 44-2018), the federal insurer of bank deposits said its summer 2018 edition of the publication also provides an overview of recently released regulations and other items of interest.

The article in Supervisory Highlights on oil and gas sector lending, FDIC said, notes that the steep drop in oil prices beginning in 2014 “tested the risk-management practices of insured banks active in O&G lending and other banks operating in geographic areas that depend on the O&G industry.” The article, the agency said, shares FDIC observations from its surveillance efforts and supervisory activities relative to these institutions.

On bank credit risk-grading systems, the publication’s article draws from examiner observations about the loan risk-rating systems at selected large state nonmember banks, the agency said. “This article illustrates how strong credit grading systems incorporate clearly identifiable processes and establish a sound governance framework,” FDIC said.

Articles in the FDIC publication are for information only and are not supervisory guidance, the agency added.

Supervisory InsightsJournal: Summer 2018 Issue Now Available