The Office of the Comptroller of the Currency ("OCC") reminded national banks, federal savings associations, and federal branches and agencies that expressions of informal or implied support from foreign governments ("implied sovereign support") should be evaluated as nothing more than a mitigating factor when evaluating a borrower's credit risk. However, the OCC further noted that "implied sovereign support is not legally binding, so banks should not rely exclusively on this informal commitment when evaluating credit risk and assigning risk ratings."
In the OCC's Bulletin on implied sovereign support, the OCC stated that an effective policy on the application of implied sovereign support should incorporate the following:
- criteria for determining how an obligor or facility's standalone risk rating might change as a result of implied sovereign support;
- methods for evaluating if implied sovereign support will be factored into a bank's risk-rating decisions; and
- "appropriate documentation standards" to promote consistent application of the policy's aforementioned criteria.
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