St.VincentandtheGrenadines InternationalFinancialServicesAuthority StatementofGuidance LargeExposures 1. StatementofObjectives Toprovideguidancetointernationalbanksonlargeexposurespursuanttosection31ofthe InternationalBanksAct. 2.

. These guidelines require a bank to establish and implement policies, practices and procedures relatingto: i) Creditgrantingandinvestmentdecisions; ii) Largeexposurestosingleorcloselyrelatedborrowers;and iii) Monitoringandreportingoflargeexposures. 3. Definitions i) Anexposureincludesloans,securities,investments,guarantees,lettersofcreditorany otherinstrumentthatmayexposethebanktoaloss.Anexposureisthemaximumloss includingaccruedinterestthatabankmaysufferifacounterpartyfailstomeetits obligations. ii) Alargeexposuremeansanyexposurethatexceeds25percentofabankscapitalbase. iii) ThecapitalbasemeansthesumofTierIandTierIIcapitallessgoodwillandother intangibleassets.Thecapitalbaseusuallyconsistsofpaidupcapitalplusretained earnings. iv) Acounterpartyisanypartywithwhomabankhasanexposure. v) Arelatedcounterpartyisacounterpartythatislinkedtothebankandincludes: i. Anyparent,subsidiary,orsistercompanythattogetherwiththebank constitutesagroup; ii. Anaturalpersonwhoisadirector,controllingshareholder,seniorofficer,or otherwisehascontrolofthebank,oranybusinesspartnerofimmediaterelative ofsuchindividual;and iii. Anycompanyofwhichanyofthepersonsreferredtoin(b)aboveisadirector, controllingshareholderandseniorofficerorhascontrol. 4. BanksPolicyStatementsonLargeExposuresandCreditRisk i) Abankmustadoptinternalpoliciesandinternallimitsthatwillensurecompliancewith theexposurelimitssetoutin5through8below.

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Abankmusthaveadequateinformationsystemstoidentifyandmeasureitslarge exposuresandidentifyanybreachesofthepolicyandguidelinelimits. iii) Anybreachesoftheserulesmustbereporteddirectlytothebanksboardofdirectors. iv) Abankmustassignadesignatedofficer(e.g.complianceofficer),tomonitorlarge exposurestoensurethebankscompliancewiththelimitsestablishedbytheguideline andthebanksinternallimits. SingleExposureLimits i) Abankmustnotincurexposurestoanindividualcounterpartyorgroupofconnected partiesthatexceeds25%ofitscapitalbase,withoutthepriorwrittenapprovalofthe Authority. ii) Abankmustnotinvestinthesharesofanentitysothatthevalueoftheinvestment exceedstenpercentofthecapitalbaseofthebankwithouttheapprovalofthe Authority1. RelatedCounterpartyLimits ExposurestorelatedpartiesarefurtherrestrictedbytheActandthisguidelineasfollows: i) Exposurestoshareholdersandthedirectorsofabank,inaggregate,maynotexceed5% ofthecapitalbaseofthebank2. ii) Unsecuredexposurestooronbehalfofrelatedpartiesmaynotexceed,inaggregate, thegreaterofUS$250,000or1%ofcapital3. iii) Unsecuredexposurestoofficersoremployeesmaynotexceedoneyearsemoluments4. iv) Investmentsinsharesorownershipinterestsinentitiesbythebankoritssubsidiaries,in aggregate,maynotexceed70percentofthecapitalbaseofthebank5. Exposuressecuredbycashandcertificatesofdeposit(CDs) i) Anexposuresecuredbycash(includingCDsissuedbythebank)heldbyabankis exemptfromthelimitscontainedinSection5ofthisguideline,providedthat: i. Boththeexposureanddepositaremadeinthesamecountryandcurrency; ii. Thedepositthatsecurestheexposuremusthavethesameorlongermaturity thantheexposure;and iii. Thebankmusthavealegalopinionthatconfirmstherightofsetoffbetween thedepositandtheexposure. ExposurestoRegulatedBanksandInsuranceCompanies

ii)

Section17(f)oftheInternationalBanksAct. Section17(1)(a)oftheInternationalBanksAct. 3 Section17(1)(b)oftheInternationalBanksAct. 4 Section17(d)oftheInternationalBanksAct. 5 Section18(b)oftheInternationalBanksAct.

ThefollowingexposuresareexemptedfromtheAuthorityslargeexposureguideline; i) Exposurestoregulatedbanksandinsurancecompanies.Exposurestoanyonebankor insurancecompanyarelimitedto200percentofthebankscapitalbase.

9. AdditionalLimits i) NotwithstandinganylimitsorexemptionsprovidedbythisGuidanceNote,theAuthority mayonacasebycasebasis: i. Limitandvarytheavailabilityandamountofanyexemptionprovidedbythe GuidanceNote. ii. Requireabanktolimititsexposurestoanyentity,country,economicsectoror otherwiseastheAuthoritymaydetermine.