25. The credit institution’s management body should be responsible for approving and regularly …

The credit institution’s management body should be responsible for approving and regularly reviewing a credit institution’s credit risk management strategy and the main policies and processes for identifying, measuring, evaluating, monitoring, reporting and mitigating credit risk consistent with the approved risk appetite set by the management body. In addition, to limit the risk that lending exposures pose to depositors and, more generally, financial stability, a credit institution’s management body should require that senior management adopt and adhere to sound underwriting practices²² .

²² The Financial Stability Board published Principles for sound residential mortgage underwriting practices in April 2012, which aim to provide a framework for jurisdictions to set minimum acceptable underwriting standards for real estate lending exposures; available at www.financialstabilityboard.org/publications/r_120418.pdf. The EBA has published Guidelines on creditworthiness assessment (EBA/GL/2015/11) which are aligned with the FSB Principles and cover some of them.

1. Overview

1.1 References

1.2 Identified Requirements

1.3 Related Standards

2. Identified Requirements

3. Related Standards

• EBA - Published by the European Banking Authority at https://www.eba.europa.eu/