+5. Loan origination procedures
---+5.1 Information and documentation
------+84. Institutions and creditors should have sufficient, accurate and up-to-date information and data …
------+85. For the purposes of the creditworthiness assessment of consumers, institutions and creditors …
------+86. For the purposes of the creditworthiness assessment of micro, small, medium-sized and large …
------+87. Institutions and creditors may use the already available information and data for existing …
------+88. If the information and data are not readily available, institutions and creditors should …
------+89. If institutions and creditors have concerns regarding the accuracy and reliability of the …
------+90. Institutions and creditors should have an accurate single customer view that enables an …
------+91. If the borrower is likely to face financial difficulties in meeting the contractual loan …
------+92. If a loan agreement involves guarantees from third parties, institutions and creditors should …
------+93. If the borrower is a member of a group of connected clients, institutions should collect the …
------+94. Institutions and creditors should document the information and data that lead to credit …
---+5.2 Assessment of borrower’s creditworthiness
------+95. Institutions should analyse the loan application of the borrower in order to ensure that the …
------+96. Institutions and creditors should, in line with the relevant consumer protection legislation …
------+97. Collateral, in the case of secured lending, by itself should not be a predominant criterion for …
------+98. When assessing the borrower’s ability to meet obligations under the loan agreement …
------+99. If the loan application is submitted jointly by more than one borrower, institutions and …
------+100. If a loan agreement involves any form of guarantees from third parties, institutions should …
------+101. For assessing the borrower’s ability to meet obligations under the loan agreement …
------+102. This section further specifies factors relevant to assessing the prospect of the borrower to …
------+103. When necessary, in particular in cases of borrowers who are self-employed or have seasonal or …
------+104. If the loan term extends past the borrower’s expected retirement age, institutions and …
------+105. Institutions and creditors should ensure that the borrower’s ability to meet obligations under …
------+106. When assessing the borrower’s ability to meet obligations under the loan agreement …
------+107. As part of the creditworthiness assessment, institutions and creditors should carry out …
------+108. In cases of foreign currency loans as defined in Article 4(28) of Directive 2014/17/EU …
------+109. For loan agreements that relate to an immovable property that explicitly state that the …
------+110. In relation to loan agreements secured by immovable property, other than those covered in …
------+111. If the property is still being constructed and intended to provide, upon completion, an income …
------+112. For loan agreements that relate to an immovable property that explicitly state that the …
------+113. As part of the creditworthiness assessment, institutions should carry out sensitivity analyses …
------+114. This section further specifies the requirements to assess the creditworthiness of the borrower …
------+115. Where necessary, in particular in cases of borrowers who are self-employed or have seasonal or …
------+116. Institutions and creditors should ensure that the borrower’s ability to meet obligations under …
------+117. As part of the creditworthiness assessment, institutions and creditors, if applicable, should …
------+118. Institutions should assess the borrower’s current and future ability to meet the obligations …
------+119. Institutions should consider that cash flow from the ordinary business activities of the …
------+120. When assessing the creditworthiness of the borrower, institutions should put emphasis on the …
------+121. When carrying out the creditworthiness assessment, institutions should: a. analyse the …
------+122. Institutions should carry out the creditworthiness assessment in relation to the specificities …
------+123. For assessing the borrower’s ability to meet obligations under the loan agreement …
------+124. If the borrower is a member of a group of connected clients, institutions should carry out the …
------+125. For lending activities with cross-border elements (e.g. trade finance, export finance) …
------+126. Institutions should assess the borrower’s exposure to ESG factors, in particular environmental …
------+127. In order to identify borrowers that are exposed, directly or indirectly, to increased risk …
------+128. For the purposes of the analysis of the financial position within the creditworthiness …
------+129. Institutions should ensure that the financial projections used in the analysis are realistic …
------+130. If applicable, institutions should assess the financial position when granting loans to …
------+131. When assessing the borrowers’ financial position, institutions should assess the …
------+132. Institutions should assess the business model and strategy of the borrowers, including in …
------+133. Institutions should assess the borrower’s knowledge, experience and capacity to manage …
------+134. Institutions should assess the feasibility of the business plan and associated financial …
------+135. Institutions should assess the borrower’s reliance on key contracts, customers or suppliers …
------+136. Institutions should assess the presence of any potential key-person dependency with regard to …
------+137. Institutions should assess any pledged collateral that is used for the purposes of risk …
------+138. Institutions should assess any guarantees, covenants, negative pledge clauses and debt service …
------+139. When relevant to credit decisions, institutions should assess the borrower’s equity and credit …
------+140. If a loan agreement involves any form of guarantees from third parties, institutions should …
------+141. Institutions should assess the borrower’s current and future ability to meet the obligations …
------+142. Institutions should consider that cash flow from the ordinary business activities of the …
------+143. When assessing the creditworthiness of the borrower, institutions should put emphasis on the …
------+144. When carrying out the creditworthiness assessment, institutions should: a. analyse the …
------+145. Institutions should carry out the creditworthiness assessment in relation to the specificities …
------+146. Institutions should assess the borrower’s exposure to ESG factors, in particular environmental …
------+147. If the borrower is a member of a group of connected clients, institutions should carry out the …
------+148. For lending activities with cross-border elements (e.g. trade finance, export finance) …
------+149. In order to identify borrowers that are exposed, directly or indirectly, to increased risks …
------+150. For the purposes of the analysis of the financial position within the creditworthiness …
------+151. Institutions should ensure that the projections used in the analysis are realistic and …
------+152. Institutions should also assess the borrower’s capacity for future profitability, to measure …
------+153. Institutions should perform an assessment of the cash conversion cycle of the borrower, to …
------+154. Institutions should, when relevant, assess these financial metrics against the metrics and …
------+155. Institutions should assess the financial position when granting loans to holding companies …
------+156. Institutions should assess the sustainability and feasibility of the borrower’s financial …
------+157. This sensitivity analysis should account for all general and asset class and product-specific …
------+158. When carrying out a sensitivity analysis of the borrower’s repayment capacity under negative …
------+159. Institutions should assess the business model and strategy of the borrowers, including in …
------+160. Institutions should assess the borrower’s knowledge, experience and capacity to manage …
------+161. Institutions should assess the feasibility of the business plan and associated financial …
------+162. Institutions should assess the borrower’s reliance on key contracts, customers or suppliers …
------+163. Institutions should assess any pledged collateral against the requirements for collateral set …
------+164. Institutions should assess any guarantees, covenants, negative pledge clauses and debt service …
------+165. Institutions should assess the borrower’s equity and credit enhancements, such as mortgage …
------+166. If a loan agreement involves any form of guarantees from third parties, institutions should …
------+167. If, in the syndicated lending or project finance transactions, the payment streams pass …
------+168. When assessing the creditworthiness of the borrowers in cases of CRE lending, in addition to …
------+169. Institutions should assess and verify the borrower’s experience in relation to the type, size …
------+170. Institutions should carry out an assessment of the income-producing capacity of the property …
------+171. In the assessment of the borrower’s repayment capacity, institutions should assess, where …
------+172. In the assessment of the prospects of reletting any property, institutions should account for …
------+173. When interest-only loans are advanced for CRE, institutions should assess property cash flow …
------+174. For the purposes of the sensitivity analysis under adverse market and idiosyncratic events …
------+175. When assessing the creditworthiness of the borrowers in cases of lending for real estate …
------+176. The creditworthiness assessment should cover, in line with the life cycle of the loan, both …
------+177. In the assessment of the development phase, institutions should establish that the borrower …
------+178. Institutions should ensure that the calculation of costs associated with the development …
------+179. Institutions should perform an assessment of the feasibility of any projected net sale proceed …
------+180. Institutions should carry out on-site visits, where relevant accompanied by a suitably …
------+181. In addition to assessing the creditworthiness of the borrower, institutions, when relevant …
------+182. When assessing the creditworthiness of the borrowers in cases of leveraged transactions, in …
------+183. Institutions should conduct a comprehensive assessment of a borrower’s capacity to repay or …
------+184. When assessing the creditworthiness of borrowers in the case of shipping finance, in addition …
------+185. Institutions should also consider other factors, such as the supply and demand in the market …
------+186. In the case of loans to shipbuilding, institutions should establish that the borrower: a. has …
------+187. When assessing the creditworthiness of the borrowers in cases of project finance, in addition …
------+188. Institutions should assess the primary source of repayment of the loan, which is the income …
------+189. As far as possible, institutions should ensure that all the assets of the project and the …
------+190. In the assessment of the development phase of the project, institutions should establish that …
------+191. Institutions should ensure that the calculation of costs associated with the development, as …
------+192. In addition to assessing the creditworthiness of the borrower, institutions should assess …
---+5.3 Credit decision and loan agreement
------+193. In order to carry out a reliable and accurate creditworthiness assessment, institutions and …
------+194. The creditworthiness assessment performed in accordance with Section 5.2 should be properly …
------+195. The decision to approve or decline the loan application (credit decision) should be taken by …
------+196. The credit decision should be clear and well documented and include all the conditions and …
------+197. The credit decision should clearly articulate a maximum period for its validity. If an …
------+198. The conclusion of the credit agreement should not take place unless the institutions and …
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5. Loan origination procedures
5. Loan origination procedures
1. Overview
1.1 References
1.2 Identified Requirements
1.3 Related Standards
2. Identified Requirements
Requirements
| Source |
Requirement |
3. Related Standards
Standards
| Source |
Requirement |
- EBA - Published by the European Banking Authority at https://www.eba.europa.eu/
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