Explanation:
Based on the provided approval hierarchy table, for a counterparty with an internal rating of R3, the maximum approval limit for the Head of Trading is `85`M, and for the Head of Risk it is \`110M. The Credit Committee has an approval limit up to \135`M. Since the requested loan amount is exactly \`135`M, it exceeds the individual authority of the Head of Trading and the Head of Risk, thus requiring the approval of the Credit Committee.
24.3.2. Julie is a credit officer at Old Crow Bank and is trying to get a $135M loan approved for an R3 internally rated company. Old Crow Bank has the below approval hierarchy.
Exposure in US dollars
| Internal rating of counterparty | Head of Trading | Head of Risk | Credit Committee |
|---|---|---|---|
| R1 | 135 | 160 | 185 |
| R2 | 110 | 135 | 160 |
| R3 | 85 | 110 | 135 |
| R4 | 60 | 85 | 110 |
| R5 | 35 | 60 | 85 |
| R6 | 10 | 35 | 60 |
Who will need to approve this loan?
A
Head of Trading
B
Head of Risk
C
Credit Committee
D
Head of Trading, Head of Risk, Credit Committee
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