141. In assessing the methods employed by a credit institution to estimate allowances, competent …

In assessing the methods employed by a credit institution to estimate allowances, competent authorities should be satisfied that the credit institution is following policies and practices consistent with the ECL measurement principles outlined in these guidelines, including, but not limited to, the following:

• a. the procedures used by a credit institution to measure ECL are robust and timely and take into account criteria such as updated valuations of credit risk mitigants (and, in particular, collateral, the residual risk after taking into account the mitigants, the correlation of that risk with borrowers’ creditworthiness and the potential impact in terms of the effectiveness of protection), cash flow estimates based on assessments of borrower-specific factors and current and future macroeconomic conditions, together with other relevant forward-looking information that affects the expected collectability of the credit institution’s lending exposure;
• b. the framework and methodology for establishing allowances, whether determined collectively or individually, are robust;
• c. aggregate allowances on lending exposures are appropriate in accordance with relevant accounting requirements and in relation to the credit risk exposure in the credit institution’s portfolio;
• d. uncollectability is recognised in the appropriate period through allowances or write-offs; and
• e. regardless of the method used to determine ECL, the credit institution’s internal processes for measuring ECL take account of the credit risk that the credit institution has taken on and changes in the credit risk of the credit institution’s lending exposures.

1. Forbhreathnú

1.1 Tagairtí

1.2 Ceanglais aitheanta

1.3 Caighdeáin ghaolmhara

2. Ceanglais aitheanta

3. Caighdeáin ghaolmhara

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