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Title 3 . Commerce, Community, and Economic Development
Chapter 2 . Land Sales
Section 190. Letters of credit

3 AAC 02.190. Letters of credit

(a) Repealed 1/10/94.

(b) All letters of credit are subject to classification in all regulatory reports of examination.

(c) Repealed 1/10/94.

(d) If several banks participate in the issuance of a letter of credit under an agreement that provides that each participant is liable only up to a certain percentage or amount of the total amount of the letter of credit issued, only the amount of a participating bank's potential liability must be considered for purposes of determining compliance with lending limitations; otherwise, the entire amount of the letter of credit must be considered by the department.

(e) No bank may issue a letter of credit unless the credit standing of the account party is the subject of credit analysis equivalent to that applicable to the potential borrower in an ordinary loan situation.

(f) The total amount of all outstanding letters of credit must be fully and adequately disclosed in the bank's published financial statements.

(g) A bank shall maintain records of its letters of credit comparable to the records maintained in connection with the bank's direct loans in order that at all times the bank's potential liability under its letters of credit and the bank's compliance with this section can be readily determined by the department.

(h) A letter of credit is not subject to this section if the letter of credit is secured by cash, or a cash equivalent such as a certificate of deposit issued by the bank that issued the letter of credit.

History: Eff. 8/18/88, Register 107; am 1/14/89, Register 109; am 1/10/94, Register 129

Authority: AS 06.01.015

AS 06.05.005 (a)

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Last modified 7/05/2006