Agencies Issue Final Guidance on Correspondent Concentration Risks
April 30, 2010
Circular No. 12202

The federal financial regulatory agencies have issued final guidance to address the risks associated with funding and credit concentrations arising from correspondent relationships.

A correspondent relationship occurs when a financial organization provides another financial organization with services related to deposits, lending or other activities.

The guidance highlights the need for institutions to identify, monitor and manage correspondent concentration risk on a standalone and organizationwide basis. The guidance also reinforces the supervisory view that financial institutions should perform appropriate due diligence on all credit exposures to, and funding transactions with, other financial institutions as part of their risk management policies and procedures.

See press release for full details.

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