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The EBA Guidelines Loan Origination and Monitoring (LOaM) aim to improve lending processes and practices, limit NPL inflows and ensure fair consumer treatment. The first of several implementation deadlines is on 30 June 2021, just months away. A major impact on the credit organization is expected, affecting the risk culture and organizational structure. The Guidelines are also interdependent with other regulatory areas such as ESG risk considerations, data- and consumer protection and requirements on data infrastructure. Given these complexities, banks should respond quickly and thoroughly.

What is LOaM about? The five chapters of the Guidelines

Internal governance for credit granting and monitoring: which includes the fundamental framework for credit activities and defines the content of credit risk policies and procedures.

Loan origination procedures: the core chapter of the Guidelines, which focuses on key aspects of assessing creditworthiness of different types of borrowers.

Pricing: requires institutions to establish a comprehensive pricing framework with clear governance.

Valuation of immovable and movable property: which focuses on the handling of collateral valuation.

Monitoring framework: which specifies key requirements for credit monitoring measures and procedures.

Erik Rood

Partner KPMG Debt Advisory

KPMG Nederland


What should be the focus?

A considerate implementation of LOaM may enhance loan portfolio performance, client relationships, and internal governance. This can be achieved through a combined focus on achieving compliance and establishing business benefits. We believe that banks should focus on

  • Addressing shortcomings and findings from the past
  • Streamlining loan origination procedures
  • Automation and an integrated workflow over the credit life cycle
  • Securing budget for improvements in technology and resources for the LOaM implementation

Time lines

The effective application timeline for new loans is 30 June 2021. For existing loans and advances that have been granted before 30 June 2021, the application date is 30 June 2022. For loans issued before 30 June 2021, missing data and information can be gathered until 30 June 2024. By that time the monitoring requirements of the guidelines should also be fully applicable.

How can we help?

With the effective application timeline of 30 June 2021 getting close, banks should have a clear roadmap to achieve compliancy. KPMG can help with the whole implementation process, from analysis to planning and execution, across the organizational structure and functions. Our highly experienced interdisciplinary team with deep knowledge of related regulations gives us the unique capability to help you navigate through the complex regulatory requirements and achieve both compliancy and desired business benefits.