The complete loss of a large exposure may represent a considerable burden on any lending bank's capital base. The Central Bank, therefore, has stipulated that large exposures may only be granted on the responsibility of the entire board of directors of the bank, necessitating a unanimous resolution on the part of all of its members or of the members of a similar designated body.

The resolution may be passed at a meeting or in writing on a circulation basis, provided that adoption is made on unanimous acceptance.

Any such resolution has to be passed prior to the lending and a copy of it must be placed in the customer's file. Where a bank has incurred a large exposure without the required prior resolution of all members, this does not impair the legal effectiveness of the transaction. However, the Central Bank reserves the right to take appropriate action in accordance with Union Law No. (10) of 1980 and related regulations of the Central Bank based thereon.

Any existing exposure, becoming a large exposure by an increase of credit facilities, also requires a unanimous resolution of all members. In the event that an existing exposure becomes a large exposure through a reduction of the capital base, the Central Bank directs that the board of directors of the bank deliberates thereon. The board of directors must appropriately document its awareness and subsequent decisions concerning remedial action.

Under very special circumstances only, banks may deviate from the general principle of a unanimous resolution. Any such exemption must be documented properly. The Central Bank, in the course of its examinations, will verify each such case.