The loan approval process

Rapid and efficient

The loan approval process is composed of a number of stages:

Our structuring skills – in other words, our ability to execute our clients’ wishes and expectations – in the financing business are one of our strengths. We focus both on earnings opportunities and on risk from the initial contact stage of a new transaction onwards.

Due diligence:
Our comprehensive, highly effective due diligence procedure rigorously analyses potential new acquisitions, allowing us to give a reliable statement of our position to our clients early on.

Negotiation of the term sheet:
A term sheet – which provides information on the key features of the potential financing but does not yet represent a binding offer on the Bank’s part – is negotiated with the client.

Credit Application

The loan application submitted to the relevant decision-making body contains all key information for and the background to the financing, including an assessment of a large number of risk factors, prepared in a decision-ready form. Risk evaluation covers more than just the loan-to-value ratio: the cash flow from the property (letting situation, expiring leases and tenant credit quality, if relevant), the borrower's debt servicing ability, credit checks and ratings also play a key role. Equally, the situation and trends on the commercial property market in question are taken into account at this point. Of course, earnings aspects must also be considered. Loan applications are voted on independently by the Sales units and Credit Management. Depending on the type of property and volume of finance concerned, they may be supplemented by expert opinions from sector and syndication specialists. Key issues here are our systematic application of the principle of dual control and our independent risk assessment process.

Lending decision:
The lending decision is made by the responsible bodies on the basis of the above-mentioned loan application. This process normally involves the Management Board and, in certain cases, the Supervisory Board as well. A rapid lending decision is in keeping with our professional understanding of what our clients need.

Agreement negotiation and preparation:
Negotiations with the client are only finalised once the loan has been approved by the relevant bodies, after which a loan agreement and the associated collateral agreements are signed. This means that the loan transaction is well structured and documented in a legally compliant manner.

The loan can be disbursed once a binding agreement has been signed and a check has been made that the conditions for disbursement have been met.

Monitoring of ongoing business:
Loan Management performs regular risk assessments during the term of the loan using suitable risk classification procedures – this applies both to scheduled and any ad hoc assessments of existing loans. The loan classification is normally reviewed at least once a year; however, depending on the risk involved significantly shorter review intervals may be applied. This continuous monitoring serves as a risk early warning system. Supplementary intensive care processes exist for higher-risk loans and, where appropriate, allowances for credit losses may be recognised in good time.

Discussions are held with the client before the loan term expires on whether they wish to renew the financing. In this case, key steps in the lending process such as the loan application and the lending decision are repeated. If not, the financing is redeemed.