In some cases, after more careful review, supervisors may actually find that given the characteristics of its CRE portfolio an institution has sound risk management and is holding appropriate capital. In general, the proposed guidance is intended to be applied quite flexibly and in a manner consistent with the size and complexity of each organization.
While supervisors continue to underscore the importance of having robust risk-management practices for CRE and other lending concentrations, we do acknowledge that banks may pursue a variety of approaches. In some cases, such as when there is not enough market data available or the relevant geographic market is small, banks may have to turn to less quantitative approaches.