SUMMARY
The client, a major banking group specialising in offering a broad range of credit facilities to its corporate and retail clients, including residential and commercial real estate loans among its offerings. Since the Bank had a strategy to enlarge its credit exposure in the real estate portfolio, an audit mission was conducted at the Group level to verify all aspects related to the real estate lending portfolio. This included examining loan origination terms and conditions as well as monitoring process of credit files throughout the life of the loan. The engagement was divided into 4 phases (1) Governance, (2) Loan origination, (3) Loan Monitoring and (4) Loan Reporting.
CUSTOMER GOALS
The Bank's main goal was to ensure the effectiveness of the Credit Monitoring and Control process. Therefore, the audit's objective was to evaluate the tasks of all related stakeholders, including Risk Management, Real Estate experts, Credit Administration, Compliance, and the ESG team.
The Bank engaged Avantage Reply to provide audit support to the Bank's audit team regarding all credit-related aspects, including borrower's rating, facility control (from origination and throughout the lifecycle of the loan), unpaid follow-up, forbearance treatment, IFRS 9, regulatory compliance, and credit risk assessment. Additionally, the Bank requested a gap analysis to be conducted between the Bank's internal credit underwriting standards and the Guidelines on Loan Origination and Monitoring (EBA GL/2020/06). Finally, Avantage Reply was also tasked with assisting in drafting all observations and providing enhancement recommendations.
CHALLENGES
One of the biggest challenges was the tight deadline of the mission. A 4-phase mission was set to be accomplished in less than 2 months.
SOLUTION