On June 19, 2013, the Office of the Comptroller of the Currency (OCC) issued a final rule on bank lending limits under Section 610 of the Dodd-Frank Act. Under the final rule, bank single-counterparty credit exposure limits (12 CFR Part 32) must now include exposures under:

The OCC also extended the compliance date for the final rule to October 1, 2013. The rule was originally scheduled to become effective on July 1, 2013. The rule, which is substantially similar to the 2012 interim final rule (see Legal Update, OCC Modifies Bank Lending Limits to Include Derivatives and Securities Financing Transactions), applies to all national banks and state and federal thrifts (covered banks).

Under 12 U.S.C. § 84, the limit on the aggregate amount of "loans and extensions of credit" that a covered bank can extend to one borrower are:

State banks are not subject to the rule and are covered by the lending limits of their respective states. However, under another Section 610 amendment that became effective January 21, 2012, insured state banks may engage in derivative transactions only if the lending limit law of its chartering state takes into account credit exposures in connection with derivative transactions.

Lending limits apply to all credit, including counterparty exposure under these types of transactions, extended to a single counterparty. The final lending limits rule provides a number of alternative methods for calculating credit exposure arising from these types of transactions.

For further information on the final lending limits rule, including details and models for how to calculate exposure under the rule, see this helpful Davis Polk memo.

For more information on state and national bank lending limits, see Practice Notes, US Banking Law: Overview: US Banking Organizations, Their Regulators and Scope of Permissible Activities and Insider Loan Restrictions for Banks: Dodd-Frank Act Changes to Insider Loan Requirements.