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  • Limit on exposures to connected counterparties — 40% aggregate

    • CM-5.5.7

      Exposures to connected counterparties may be justified only when undertaken for the clear commercial advantage of the bank, when negotiated and agreed on an arm's length basis, and when included in the large exposures policy statement agreed with the Agency.

    • CM-5.5.8

      No lending by a bank to its own external auditors shall be permitted. In this context, "external auditors" refers to the firm/partnership, the partners, the Directors and managers. For those conventional banks which provide Islamic banking services, no lending to members of the Shari'a board shall be permitted.

    • CM-5.5.9

      For the purpose of this module, "Connected counterparties" includes companies or persons connected with the bank, including in particular subsidiaries and associated companies (whether such association is due to control or shareholding or otherwise), Directors and their associates (whether such association is due to control or family links or otherwise), management, and shareholders holding 10% or more of the voting power of the bank. In this context, family links means spouse, father, mother, sons, daughters, sisters and brothers.

    • CM-5.5.10

      Exposures to all connected counterparties listed below when taken together, may not exceed 40% of (consolidated) capital base.

      Connected Counterparties Individual Limit Aggregate Limit
      Shareholders with "significant ownership (i.e. 10% and above)" 0% 0%
      Directors 10% 20%
      Associated Companies / Unconsolidated subsidiaries 15% 20%
      Total (including management) 40%

    • CM-5.5.11

      Lending to senior management is covered under chapter CM-6. All credit facilities to senior management will be included under the total connected counterparties limit of 40% of capital base.