Can you explain the concept of the 100-300 rule in banking? How does it work and what are the implications for financial institutions and customers alike? Is it a universally accepted principle or does it vary depending on the specific context?
5 answers
TaegeukChampionCourageousHeart
Sat Sep 21 2024
The regulatory framework for banks encompasses stringent criteria aimed at assessing their risk profiles.
KpopHarmonySoulMate
Sat Sep 21 2024
A pivotal aspect of this evaluation revolves around two distinct thresholds that banks must not surpass.
AzureWave
Sat Sep 21 2024
Firstly, banks are scrutinized for their CRE (Commercial Real Estate) loan portfolios, with a particular emphasis on those exceeding 300% of their risk-based capital levels.
Giulia
Fri Sep 20 2024
Moreover, the growth rate of these CRE loans over the preceding 36 months is also under the microscope, flagging any increase surpassing 50% as a cause for concern.
Federico
Fri Sep 20 2024
Secondly, the regulatory lens also focuses on construction (C&D) loans, specifically those that represent at least 100% of a bank's risk-based capital.