Legal Lending Limit

Risk management. For a bank, it matters. Lots.

In the modern era, the legal lending limit for most banks is 15%. That is, any bank can't have as a borrower one entity who borrows more than 15% of the bank's total capital.

Why? Well, if that one borrower went bust, the livelihood of the bank itself would be in jeopardy, likely putting at risk the deposits and other credits the bank held from other "innocent" potential victims.