Comptroller of the Currency
Administrator of National Banks

The Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation have jointly issued the attached guide, “Changes to the Interagency Country Exposure Review Committee Process.” This issuance rescinds the prior guide dated November 23, 1999.

The federal banking agencies recognize the improvements made in banks’ cross-border exposure analyses. Specifically, banks have:

• Improved their sovereign risk management practices;
• Developed better analytical approaches for analysis and assessment of sovereign risk; and
• Become better at monitoring, managing, and controlling sovereign credit risk, having established limits by country and sovereign obligor.

Furthermore, international accounting and reporting standards have greatly improved resulting in greater transparency in financial disclosure by governments and public-sector obligors.

As a result, the agencies reformed the ICERC process with the following changes:

• To rate only those countries in default.
• To eliminate the rating categories of Other Transfer Risk Problems (OTRP), Weak, Moderately Strong, and Strong because countries with these ratings are not at imminent risk of default or other transfer risk event.

For further information, please contact the Global Banking & Financial Analysis Department at (202) 874-5240.