TMBThanachart Bank Public Company Limited and its Subsidiaries (Formerly TMB Bank Public Company Limited and its Subsidiaries) Notes to the financial statements For the year ended 31 December 2021 43 avoid “wrong-way” risk characteristics where the borrower’s counterparty risk is positively correlated with the risk of deterioration in the collateral value. For “guarantee”, the process for the analysis of the guarantor’s creditworthiness is aligned to the credit assessment process for borrowers. For examples • Credit evaluation process - different risk levels require different LTVs • Credit approval process - LTV is one of the factors to determine the level of approval authorities. At present, the Bank defines the approval authority based on business type, industry, the customer’s risk rating as well as LTV criteria whereby LTV criteria is applied for Commercial Banking customer at appropriate level depend on industry. For mortgage Loan, 70% to 110% LTV criteria is applied. For Hire Purchase, 60% to 100% LTV criteria is applied, depending on risk level of customer and collateral. Collateral Appraisal Approach: The appraisal shall be conducted by applying one or more of the approaches specified in the codes of professional ethics and standards of appraisal practice stipulated by the Office of the Securities and Exchange Commission (SEC) and is under responsibility of Asset Appraisal Department. The following are example of collateral appraisal approach: • Immovable property for commercial purpose shall be appraised by the cost approach, or the direct sales comparison approach, or the income approach. • Immovable property for residential purpose shall be appraised by the direct sales comparison approach, or the cost approach. • Other immovable properties shall be appraised by the cost approach, or the direct sales comparison approach, or the income approach. • Machinery and vehicle shall be appraised by the direct sales comparison approach, or the cost approach • Criteria for appraising marketable equity securities and debt securities collateral shall be established in writing and agreed among the Appraisal Committee members. 287 Form 56-1 One Report 2021
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