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The 2020 guidelines from the European Bank Authority (EBA) on Loan origination and monitoring

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Retail Banking

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In the last decade, Banks in the EU have been struggling with NPLs (Non Performing Loans) in their balance sheet due to the global financial crisis and the following recessions, coupled with structural factors and inadequate loan origination practices.

NPLs have been a major concern for banks, supervisors and investors: They affect banks’ profitability, consume productive resources and limit banks’ capacities to lend to the real economy increasing their capital requirements.

In 2020, the European Banking Authority (EBA) had published new guidelines on loan origination and monitoring. They come along with the ECB’s supervisory priorities for 2019 and 2020 assessing the credit underwriting quality with a focus on new lending and renegotiations of former lending.

You will find a synthesis of the EBA loan origination & monitoring guidelines (with a focus on the 5 main topics), as well as Headlink’s study of the areas of impact on Financial Institutions.

Authors

Amine El Bermaki

Manager

Jonathan Fernandez

Consultant

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