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Lead Bank Extends Loan that is Participated-Rules

Answered by: 
Kathleen Blanchard
Randy Carey

Question: 
If a lead bank extends a loan that is participated, and the participating bank does not agree with the new terms, where do we stand as far as: Is the lead bank required to repurchase the participation? Does it affect the lending limit of the lead? What statute or regulation clarifies questions of this type?
Answer: 

Answer by Randy Carey: This will all depend on the participation agreement signed by both parties.

Answer: 

Answer by Kathleen Blanchard: Also, a re-purchased participation will be back on the bank's books and affect the legal lending limit.

First published on BankersOnline.com 10/3/11

First published on 10/03/2011

Filed under: 
Lending
Filed under lending as: 
Lending Limit

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