996 - Banca Antonveneta

Section 1CREDIT RISKQUALITATIVE INFORMATION1. General IssuesThe principal objective of the Bank’s credit activity isto protect asset quality in accordance with the principalwhereby a distinct division is drawn betweencommercial responsibilities and credit functions.These objectives were pursued in carrying out ordinaryoperations of investigation, appraisal ofcreditworthiness and issuing credit lines, as well as indeveloping specific projects aimed at the progressivecompliance with the Basel 2 principles.As regards alignment with the principles and criteria ofthe New Basel Agreements, the project concerning thereview of the credit processes aims to add a syntheticopinion expressed through internal rating systems,during the investigation phase and the actual issuingof the loan (including through a review of the powersdelegated), in the management as a well as theperformance monitoring of loans granted.2. Credit risk management policies2.1 Organisational factorsThe bank’s credit process is regulated in stages as partof the Internal Auditing System, the purpose being toidentify the criteria required to manage risk profiles,activities to be introduced to ensure correct applicationof said criteria, the structures responsible for carryingout these activities and the associated procedures.This process is split into separate stages and activitiesassigned to separate organisational divisions to ensurethe overall effectiveness, i.e. that it is capable ofachieving the preset objectives (effectiveness) anddoing this at an acceptable cost (efficiency).The credit process is divided into the following stages:Credit policyThe aim of the banks’ credit policy is to implementshort and long-term strategies to determine thefinancial resources required by the credit sector.Specifically, the final amount is established on thebasis of the results of the following analyses:• customers' financial needs;• growth rate of loans;• competitiveness and positioning of group productsand prices compared with competitors;• structure of deposits;• other restrictions imposed by public sector and/orregulatory standards;• the degree of inherent economic and financial riskand hence, income and equity potential to covercurrent and future risk;• internal structural and organisationalcharacteristics.Assessing the creditworthiness of loanapplicantsThe creditworthiness of loan applicants is assessed todetermine if they will be able to repay the loan and tocheck any compatibility between individual loanapplications and deciding how much and what kind ofcredit to grant. The purpose of the assessment is toquantify the associated economic risk as regards thepotential insolvency of the applicant, and the financialrisk resulting from failure to meet obligations inaccordance with agreed terms.Credit grantingThe risk of the associated operation is a centralconsideration in the lending process. This risk isdetermined on the basis of:• the extent of the credit being requested;• the purpose and structure of the credit (riskcategory).On the basis of the resultant risk rating, calculated asexplained above, decision-making powers are assignedfor the relative credit granting process, in accordancewith decision-making system risk managementcriteria.Monitoring creditsThe purpose of the bank’s credit control andmanagement activities is to constantly monitor theongoing solidity of the borrower's and guarantor'seconomic, financial and equity profile. The followingsteps are necessary parts of the process:• identify if any problems were recorded for loans overa previous period prior to the date of the periodiccheck;• select and examine any loans showing evidence ofimpairment (problem credits) as regards both technicalaspects and the creditworthiness of the borrower;• classify the loans examined as performing loans andproblem credits.Resultant problem loans are classified on the basis ofthe associated degree of risk into the risk categoriesused by the bank and in accordance with generalprinciples prescribed in Regulatory Provisions.315