EBA published a report on the benchmarking of national loan enforcement frameworks across 27 EU member states, in response to the call for advice from EC. EBA also calls on competent authorities to exercise their judgment and be pragmatic and proportionate in monitoring the implementation of the guidelines, taking into account the operational challenges and priorities institutions may have due to the COVID-19 pandemic, while facilitating the economic recovery efforts. 0000028698 00000 n The guidelines reflect recent supervisory priorities and policy developments related to credit granting, including environmental, social and governance factors, anti-money laundering and countering terrorist financing, and technology-based innovation. The guidelines set requirements for assessing the borrowers’ creditworthiness and for handling of information and data for the purposes of such assessments. Effective Date: June 30, 2021 (with transitional arrangements), Keywords: Europe, EU, Banking, Credit Risk, NPLs, Loan Origination, Guidelines, Mortgage Credit Directive, ESG, Governance, AML, Fintech, Artificial Intelligence, Big Data, COVID-19, EBA. 120 0 obj <> endobj xref Subject matter, scope and definitions (paras. FSB published a letter from its Chair Randal K. Quarles, along with two reports exploring various aspects of the market turmoil resulting from the COVID-19 event. the application of the guidelines to existing loans and advances that require renegotiation or contractual changes with borrowers will apply from 30 June 2022; and. 0000003658 00000 n However, institutions will benefit from a series of transitional arrangements. Notwithstanding the extended transition period, EBA notes that all loan origination requires effective risk oversight and management. 0000053516 00000 n These guidelines will replace the existing EBA guidelines on creditworthiness assessments under the Mortgage Credit Directive (EBA/GL/2015/11), which the EBA issued in June 2015 and which will be repealed with the effect from the date of application of the guidelines on loan origination and monitoring. 0000006271 00000 n institutions will be allowed to address possible data gaps and adjust their monitoring frameworks and infrastructure until 30 June 2024. 0000059707 00000 n 0000033814 00000 n The application of the guidelines to the already existing loans and advances that require renegotiation or contractual changes with the borrowers will be from June 30, 2022. Home > United Kingdom > Banking > EBA guidelines on loan origination and monitoring. The EBA developed the Guidelines on loan origination and monitoring in response to the European Council Action Plan on tackling the high level of non-performing exposures. On 29 May 2020, the European Banking Authority (EBA) published guidelines on loan origination and monitoring that expect institutions to develop robust and prudent standards to ensure newly originated loans are assessed properly. The guidelines specify internal governance arrangements for the granting and monitoring of credit facilities throughout the lifecycle. 0000003544 00000 n EBA Publishes Guidelines on Loan Origination and Monitoring. 0000007010 00000 n 0000001514 00000 n The EBA's draft Guidelines on loan origination and monitoring are the new standard for credit underwriting in Europe. 0000000996 00000 n 120 35 0000005964 00000 n Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader. To support the dual focus of the guidelines, bringing together the prudential framework and consumer protection aspects of credit granting, the guidelines, in particular: The publication of the guidelines comes at the unprecedented time of the COVID-19 pandemic and the EBA notes that their implementation should reflect the balance between the needs for banks to focus on core operations and to strengthen future lending. 0000000016 00000 n 0000047947 00000 n The European Banking Authority (EBA) published May 29th its Guidelines on loan origination and monitoring, that require institutions to develop robust and prudent standards in order to ensure the proper assessment of the newly originated loans. 0000028628 00000 n 0000021960 00000 n HKMA issued a letter to consult the banking industry on a full set of proposed draft amendments to the Banking (Capital) Rules for implementing the Basel standard on capital requirements for banks’ equity investments in funds in Hong Kong. 0000009330 00000 n trailer <<62E8E80A4620401090B3CAF6A7351F13>]/Prev 565932>> startxref 0 %%EOF 154 0 obj <>stream 0000059668 00000 n FSB published a report that examines progress in implementing policy measures to enhance the resolvability of systemically important financial institutions. Compliance and reporting obligations (paras. 0000007695 00000 n 0000092863 00000 n Th guidelines clarify the credit decision-making process, including the use of automated models, building on the requirements of the EBA guidelines on internal governance. specify the ongoing monitoring of credit risk and credit exposures, including regular credit reviews of borrowers. 5-17) Addressees (para. 0000001645 00000 n European regulators and supervisors are paying increasing attention to this important driver of banking stability. They are composed of 8 sections; the background of the requirements is detailed in the three first sections and the specific requirements are highlighted in the following 5 sections. The guidelines will apply from June 30, 2021. This in turn should ensure that newly originated loans are of high credit quality and contribute in the future to lower levels of nonperforming loans. 1-4) 2. 0000006454 00000 n IASB started the post-implementation review of the classification and measurement requirements in IFRS 9 on financial instruments and added the review as a project to its work plan. 0000012500 00000 n Institutions will benefit from a series of transitional arrangements: The EBA expects Member State competent authorities to exercise their judgement and be pragmatic and proportionate in monitoring the implementation of the guidelines by institutions. 1. 0000003480 00000 n h�b```b``Ig`c`P� Ā [email protected]��& ^yn&=m��l��?�KO`@��s495����UcS�W�\��mu�#"O*�|. 0000002688 00000 n clarify the internal governance and control framework for the credit-granting and credit decision-making process, building on the requirements of the EBA guidelines on internal governance; specify requirements for the creditworthiness assessment of borrowers, differentiating between lending to (1) consumers, (2) micro and small enterprises and (3) medium-sized and large enterprises, and set out the requirements for handling information and data for such assessments; set out supervisory expectations for the risk-based pricing of loans; provide guidance on the approaches to the valuation of immovable and movable property collateral at the point of credit granting, and the monitoring and review of the value of such collateral at the point of credit granting, and the monitoring and review of the value of such collateral, based on the outcomes of the monitoring; and. 0000053236 00000 n 0000018717 00000 n The objective of the guidelines is to improve banks’ credit-granting practices and governance arrangements to ensure that they have robust and prudent lending standards. %PDF-1.7 %���� Already subscribed? The Trustees of the IFRS Foundation, which are responsible for the governance and oversight of IASB, have announced the appointment of Dr. Andreas Barckow as the IASB Chair, effective July 2021. 0000025172 00000 n Click here to manage your preferences. The guidelines will apply from June 30, 2021, with certain transitional arrangements. Norton Rose Fulbright’s Financial services: Norton Rose Fulbright, LLP © 2020. Institutions will be allowed to address possible data gaps and adjust their monitoring frameworks and infrastructure until June 30, 2024.