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Would a loan which is 100% secured by liquid marketable securities count against our lending limit under the Illinois Banking Act? Does it matter that the securities are not held at our institution but at our wealth management division, which is an affiliate of the bank? – IBA Compliance Connection

IBA Compliance Connection

Your go to source for compliance!

Would a loan which is 100% secured by liquid marketable securities count against our lending limit under the Illinois Banking Act? Does it matter that the securities are not held at our institution but at our wealth management division, which is an affiliate of the bank?

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Yes, but the loan may exceed the Act’s general lending limit (25% of the unimpaired capital and unimpaired surplus), up to a higher limit of 30% — provided that it is secured by readily marketable collateral with a market value at least equal to the amount in excess of the 25% limit.

For resources related to our guidance, please see below:

  • Illinois Banking Act — 205 ILCS 5/32 (general lending limit provisions)