182. When assessing the creditworthiness of the borrowers in cases of leveraged transactions, in …

When assessing the creditworthiness of the borrowers in cases of leveraged transactions, in addition to the general provisions on the creditworthiness assessment set out in Section 5.2.5 and Section 5.2.6, institutions should identify excessive leverage at origination, defined as a ratio: total debt to earnings before interest, taxes, depreciation and amortisation (EBITDA). Transactions with excessive leverage should remain exceptional (and should be in line with an institution’s risk appetite) and form part of the credit delegation and risk management escalation framework of an institution.

1. Overview

1.1 References

1.2 Identified Requirements

1.3 Related Standards

2. Identified Requirements

3. Related Standards

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  EN: Guidelines and other publications of the European Banking Authority (EBA), https://www.eba.europa.eu/. © European Banking Authority. Reproduction is authorised provided the source is acknowledged (EBA legal notice). Divided into sections and converted into the GRCA format, the wording unchanged. Only the versions published by the EBA are authoritative.

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