We have an application for a consumer loan with the collateral being stock in our parent holding company. Our bank is a wholly owned sub of the parent holding company. We are an OTS institution and our parent is a publicly traded company.

If I understand correctly, we can lend against the stock of our parent provided we have 130% minimum collateral. Also, this is a covered transaction subject to a %% limitations of capital.

Am I on the right track? Any help is appreciated!
Thanks

I agree that it is a "covered transaction" and subject to the % of assets limitations. However, I don't think that the 130% limit applies when it comes to valuation of the collateral. I think the 130% limitation applies when talking about loans to affiliates. It looks like in this case you don't have a loan to an affiliate but rather a loan to a consumer that is secured by affiliate security. For valuation purposes this type of loan would come under 223.24 of Reg W. I would think the lending decision on LTV would then be based on what your internal policy is on loans secured by stock. If you have loaned more on the affiliate stock than on other stock I think you would then have to justify that decision.

RegW 223.24