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  • (iv) Definition of Retail Exposures

    • CA-5.2.18

      An exposure is categorised as a retail exposure if it meets all of the following criteria:

      Nature of Borrower or Low Value of Individual Exposures

      (a) Exposures to individuals — such as revolving credits and lines of credit (e.g. credit cards, overdrafts, and retail facilities secured by financial instruments) as well as personal term loans and leases (e.g. installment loans, auto loans and leases, student and educational loans, personal finance, and other exposures with similar characteristics). There will be an exposure threshold of BD250,000 to distinguish between retail and corporate exposures;
      (b) Residential mortgage loans (including first and subsequent liens, term loans and revolving home equity lines of credit) are eligible for retail treatment regardless of exposure size so long as the credit is extended to an individual that is an owner- occupier of the property (with buildings containing only a few rental units — otherwise they are treated as corporate). Loans secured by a single or small number of condominium or co-operative residential housing units in a single building or complex also fall within the scope of the residential mortgage category. CBB may set limits on the maximum number of housing units per exposure, on a case by case basis;
      (c) Loans extended to small businesses and managed as retail exposures are eligible for retail treatment provided the total exposure of the banking group to a small business borrower (on a consolidated basis where applicable) is less than BD 250,000 . Small business loans extended through or guaranteed by an individual are subject to the same exposure threshold; and
      (d) CBB will provide flexibility in the practical application of such thresholds such that banks are not forced to develop extensive new information systems simply for the purpose of ensuring perfect compliance. CBB will however, check on regular basis to ensure that such flexibility (and the implied acceptance of exposure amounts in excess of the thresholds that are not treated as violations) is not being abused.
      Amended: April 2011
      Apr 08

    • Large Number of Exposures

      • CA-5.2.19

        The exposure must be one of a large pool of exposures, which are managed by the bank on a pooled basis. CBB may, on a case by case basis, set a minimum number of exposures within a pool for exposures in that pool to be treated as retail:

        (a) Small business exposures below BD 250,000 may be treated as retail exposures if the bank treats such exposures in its internal risk management systems consistently over time and in the same manner as other retail exposures. This requires that such an exposure be originated in a similar manner to other retail exposures. Furthermore, it must not be managed individually in a way comparable to corporate exposures, but rather as part of a portfolio segment or pool of exposures with similar risk characteristics for purposes of risk assessment and quantification. However, this does not preclude retail exposures from being treated individually at some stages of the risk management process. The fact that an exposure is rated individually does not by itself deny the eligibility as a retail exposure.
        Amended: April 2011
        Apr 08

      • CA-5.2.20

        Within the retail asset class category, banks are required to identify separately three sub-classes of exposures: (a) exposures secured by residential properties as defined above, (b) qualifying revolving retail exposures, as defined in the following paragraph, and (c) all other retail exposures.

        Apr 08