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Questions and thoughts from underwriters for the banking industry regarding PPP and LIBOR

Underwriting Spotlight

Financial, Executive and Professional Risks (FINEX)

By Alison MacLaren | February 1, 2021

Key questions from underwriters regarding the PPP and LIBOR transition.

Common Paycheck Protection Program (PPP) questions from underwriters:

Explain the bank’s level of participation in the PPP.
Were the bank’s PPP loans restricted in any way to certain borrowers, e.g. only existing customers?
If the bank loaned to new customers, what was the breakdown in loans given to new vs. existing customers?
What is the breakdown of industries loaned to?
How much did the bank collect in fees? What amount, if any, is being paid out in fees to agents?
Was there an audit conducted of originated loans? If so, what were the results and how did the bank respond?
Discuss how the bank is approaching the forgiveness process.

Common LIBOR questions from underwriters:

Discuss the institution’s LIBOR transition planning framework and its progress thus far.
Is the institution on track to meet transition deadlines ahead of the 2021/2023 cessation dates?
Describe client communication protocols and feedback from clients regarding same.
For legacy loans, discuss process and procedure for amending fallback language. What is the target completion date?
Is the institution intending to utilize rates other than SOFR?
What mechanisms or strategies are in place, if any, to address potential delta between lending and swap agreements?
What proportion of new loans contain an amendment versus a hardwire approach?
Identify internal training procedures for staff.
How has COVID-19 disrupted and changed your LIBOR transition planning?
How has the revised June 2023 deadline impacted preparations and internal deadlines?


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Banking market update – Q4 2020 PDF 3.1 MB

Banking Industry Leader, Willis Towers Watson

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