1.0 General Credit Principles
Version 3.2 · Effective 01 January 2026 · Approved by Credit Committee
1.1 Purpose and Scope
This Credit Policy establishes the principles, standards, and guidelines governing SmartAgentBank's credit activities across all business lines. It applies to all credit decisions, including new originations, renewals, amendments, and restructurings of credit facilities exceeding €500,000.
1.2 Credit Culture
The Bank maintains a conservative credit culture with a preference for secured lending, strong covenant packages, and borrower relationships where the Bank holds a primary banking position. All credit decisions must be based on a thorough assessment of repayment ability, rather than reliance on collateral alone.
1.3 Minimum Credit Standards
| Parameter | Standard | Exception Permitted |
|---|
| Minimum Internal Rating | BB– (Grade 8) | Yes, up to B+ with CRO approval |
| Maximum LTV (CRE) | 70% | Yes, up to 80% with Credit Committee |
| Minimum DSCR | 1.25x | Yes, 1.15x with enhanced monitoring |
| Minimum Equity Contribution | 25% | No |
| Maximum Tenor (CRE) | 10 years | Yes, up to 15 years for Grade A assets |
| Minimum Loan Size | €2m | No |
| Maximum Single Borrower | 10% of Tier 1 Capital | No — regulatory limit |
2.0 Lending Criteria
Version 3.2 · Effective 01 January 2026
2.1 Borrower Assessment
All borrowers must be assessed on the basis of the five pillars of credit analysis: Character, Capacity, Capital, Conditions, and Collateral (5Cs framework). The assessment must be documented in a formal Credit Memorandum and reviewed by an independent credit officer for transactions above €5m.
2.2 Financial Analysis Requirements
A minimum of three years of audited financial statements is required for all new corporate borrowers. Financial projections covering the full loan tenor must be stress-tested under three scenarios: base case, downside (–20% revenue), and severe downside (–35% revenue).
2.3 Rating Requirements
| Facility Size | Required Rating Model | Override Authority |
|---|
| €0.5m – €5m | SME Rating Tool | Regional Credit Officer |
| €5m – €25m | Corporate Rating Model | Senior Credit Officer |
| €25m – €100m | Corporate Rating Model + Expert Assessment | Chief Risk Officer |
| > €100m | Full Rating Panel | Credit Committee |
3.0 CRE Financing Guidelines
Version 3.2 · Effective 01 January 2026
3.1 Eligible Property Types
The Bank finances Grade A and B commercial real estate including: Office (primary locations), Logistics/Industrial (modern facilities), Retail (non-secondary), Residential (portfolio lending only), Hotel (limited to 4-star+ branded), and Mixed-Use. Residential development finance is subject to a separate policy.
3.2 CRE-Specific Underwriting Standards
| Property Type | Max LTV | Min DSCR | Min WAULT | Max Vacancy at Close |
|---|
| Office — Prime | 65% | 1.30x | 3 years | 15% |
| Office — Secondary | 55% | 1.40x | 4 years | 10% |
| Logistics / Industrial | 65% | 1.25x | 4 years | 10% |
| Retail — High Street | 60% | 1.35x | 5 years | 5% |
| Retail — Shopping Centre | 55% | 1.40x | 5 years | 5% |
| Hotel — Branded | 60% | 1.50x | N/A | N/A |
| Residential Portfolio | 70% | 1.20x | N/A | 5% |
4.0 Concentration Limits
Version 3.2 · Effective 01 January 2026
4.1 Sector Concentration Limits
| Sector | Max % of Loan Book | Current Actual | Headroom | Status |
|---|
| Commercial Real Estate | 40% | 34.2% | 5.8pp | ✓ OK |
| Industrial | 20% | 18.1% | 1.9pp | ⚠ Near Limit |
| Technology | 15% | 9.4% | 5.6pp | ✓ OK |
| Retail Trade | 10% | 7.8% | 2.2pp | ✓ OK |
| Hospitality | 8% | 6.1% | 1.9pp | ⚠ Near Limit |
| Energy | 10% | 4.2% | 5.8pp | ✓ OK |
| Construction | 8% | 3.9% | 4.1pp | ✓ OK |
4.2 Single Borrower Limits
Maximum single borrower exposure is capped at 10% of Tier 1 Capital (approx. €48m at current capitalisation). Group-level exposures are aggregated and treated as a single borrower for concentration purposes.
5.0 Collateral Standards
Version 3.2 · Effective 01 January 2026
5.1 Eligible Collateral
The Bank accepts the following collateral types, subject to the regulatory haircuts specified in CRR3 Article 208 (Real Estate) and Articles 197–198 (Financial Collateral):
| Collateral Type | Eligibility | Max Regulatory Haircut | Revaluation Frequency |
|---|
| Commercial Real Estate (IPRE) | CRR3 Eligible | 25% | Annual (independent) |
| Residential Real Estate | CRR3 Eligible | 20% | 3 years (statistical) |
| Listed Equities | CRR3 Eligible | 15% | Daily (market) |
| Government Bonds (IG) | CRR3 Eligible | 4% | Daily (market) |
| Corporate Bonds (IG) | CRR3 Eligible | 8% | Daily (market) |
| Business Assets / Receivables | Internal only | 35–50% | Annual |
6.0 Approval Authorities
Version 3.2 · Effective 01 January 2026
6.1 Delegated Authority Matrix
| Authority Level | Max New Money | Rating Floor | Requires Co-Signatory |
|---|
| Relationship Manager | €1m | BBB– | No |
| Regional Credit Officer | €10m | BB | Yes (RM) |
| Senior Credit Officer | €25m | BB– | Yes (RCO) |
| Chief Risk Officer | €75m | B+ | Yes (SCO) |
| Credit Committee | Unlimited | Any (min. B–) | Quorum required |
7.0 Covenant Framework
Version 3.2 · Effective 01 January 2026
7.1 Financial Covenants — CRE Loans
| Covenant | Standard Level | Cure Period | Consequence of Breach |
|---|
| Debt Service Coverage Ratio | > 1.25x (tested quarterly) | 90 days | Cash trap + review |
| Loan-to-Value Ratio | < 70% (tested annually) | 60 days | Mandatory repayment |
| Interest Coverage Ratio | > 2.0x | 90 days | Cash trap |
| Occupancy Rate | > 80% (tested annually) | 120 days | Enhanced reporting |
8.0 Exceptions & Escalation
Version 3.2 · Effective 01 January 2026
8.1 Policy Exception Process
Any credit proposal that does not comply with one or more standards in this policy requires a formal Policy Exception. Exceptions must be documented in the Credit Memorandum, approved by a minimum of two approval levels above the standard delegated authority, and reported to the Risk Committee on a quarterly basis.
8.2 Exception Register Summary (Q4 2025)
| Exception Type | Count (Q4 2025) | Approved By |
|---|
| LTV above policy maximum | 7 | Credit Committee |
| DSCR below minimum | 12 | CRO / Credit Committee |
| Rating below floor | 4 | Credit Committee |
| Tenor above maximum | 3 | Credit Committee |