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BankNet

BankNet
More resources for national banks

Loan Sales and Participations

A loan participation is a sharing or selling of interests in a loan. Depository institutions use loan participations as an integral part of their lending operations. Banks may sell participations to enhance their liquidity, interest rate risk management, and capital and earnings. They may also sell participations to diversify their loan portfolio and serve the credit needs of borrowers.

References
BC = Banking Circulars
OCC=Bulletin

Purchases of Loans in Whole or In Part—Participations (BC 181, August 1984)
Describes prudent purchases of loans and loan participations and outlines appropriate lending policies and procedures

Sales of 100% Loan Participations   (OCC 1997-21, April 1997), Interagency Statement 
Provides guidance related to loan sales programs of the type discussed in Banco Espanol de Credito v. Security Pacific National Bank