dogmas for the Assessment of Banks Management of Credit Risk A. Establishing an appropriate legal opinion insecurity environment Principle 1: The tabular crop of directors should agree business for affirmative and periodic solelyy reviewing the deferred payment adventure strategy and significant credit risk policies of the bank. The strategy should radiate the banks valuation account for risk and the level of profitability the bank expects to achieve for incur various credit risks. Principle 2: Senior caution should have responsibility for implementing the credit risk strategy approved by the dining table of directors and for developing policies and procedures for secernateing, measuring, monitoring and controlling credit risk. Such policies and procedures should put credit risk in all of the banks activities and at both the individual credit and portfolio levels. Principle 3: Banks should identify and manage credit risk inherent in all products and acti vities. Banks should ensure that the risks of products and activities unused to them are subject to becoming procedures and controls before being introduced or lowtaken, and approved in put on by the board of directors or its appropriate committee. B. Operating low a choke credit granting process Principle 4: Banks must operate under sound, well-defined credit-granting criteria.
These criteria should include a thorough understanding of the borrower or counterparty, as well as the purpose and structure of the credit, and its source of repayment. Principle 5: Banks should generate overall credit limits at the level of individual borrowers and co! unterparties, and groups of committed counterparties that aggregate in a comparable and meaningful substance of life different types of exposures, both in the banking and trading give-and-take and on and off the balance sheet. Principle 6: Banks should have a clearly-established process in place for approving new credits as well as the extension of actual credits. Principle 7: All extensions of...If you want to get a full essay, auberge it on our website: OrderCustomPaper.com
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