Collateral Valuation Review Template (CRR Art. 208, 229, EBA)

Collateral Valuation Review: [Collateral ID or property name]

Bank-side review of a third-party or internal valuation of immovable or movable property taken as collateral, and the record of how the bank monitors and revalues it: asset and purpose, valuer independence and qualification, basis and method of value, assumptions and market evidence, reviewer findings, haircuts and lending value, loan to value (LTV) and credit risk mitigation eligibility, monitoring and revaluation frequency, and sign-off. Built for EU credit institutions applying Regulation (EU) No 575/2013 (CRR) Articles 208 and 229 as amended by Regulation (EU) 2024/1623 and EBA/GL/2020/06 Section 7 (valuation of immovable and movable property), with US rows for 12 CFR Part 34 Subpart C and the 2010 Interagency Appraisal and Evaluation Guidelines. Professional valuation standards (RICS Valuation, Global Standards and the International Valuation Standards) are cited by name only. Replace every [bracketed] value and every row marked Example. This is a document format, not valuation, financial, legal or regulatory advice. Requirements are referenced by number: obtain the regulation, guideline or standard for the normative text.

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Revision history

Contents

• 1. Purpose and scope
• 2. Legal and supervisory basis
• 3. Asset description
• 4. Valuer independence and qualification
• 5. Basis and method of value
• 6. Assumptions and market evidence
• 7. Reviewer findings
• 8. Value relied on, haircuts and lending value
• 9. Loan to value and eligibility
• 10. Monitoring and revaluation
• 11. Movable property collateral
• 12. Conclusion and sign-off
• 13. Glossary and references
• Standard and licence note

1. Purpose and scope

Explain the trigger for the review, the exposure the collateral secures and the decisions that will use the value: credit approval, regulatory capital (credit risk mitigation), the expected credit loss (ECL) allowance, the non-performing exposure backstop or an enforcement strategy. Each use may need a different value: market value for capital eligibility, a prudent realisable value net of costs for provisioning and enforcement.

Choose the depth of review in proportion to the exposure and the risk. A desktop review checks that the report is complete, that the valuer meets the panel criteria and that the inputs are within the bank's market data ranges. A full technical review adds an independent view of rent, yield, comparables and capital expenditure, and is appropriate for large or non-performing exposures, for specialised assets and whenever the value has moved by more than the policy tolerance since the last valuation. Record which level you performed and why, so that a later reader knows how much reliance the conclusion can bear.

2. Legal and supervisory basis

The rules below set minimum standards for how collateral is valued, monitored and revalued. The table is a summary as of 2026-10; check local law, the consolidated CRR on EUR-Lex and your supervisor's expectations before relying on it.

Example US thresholds from 12 CFR 34.43 (checked 2026-10-25): an appraisal is not required for residential real estate transactions of USD 400,000 or less, commercial real estate transactions of USD 500,000 or less, and business loans of USD 1 million or less that do not depend on the sale of, or rent from, real estate as the primary repayment source; in those cases an evaluation consistent with safe and sound practice is required instead.

3. Asset description

The bank's collateral must be legally enforceable and the bank must be able to realise it within a reasonable time (CRR Art. 208). Record the legal review date and any limitation, such as prior-ranking public charges or tenant pre-emption rights.

4. Valuer independence and qualification

EBA/GL/2020/06 section 7.3 sets criteria for valuers, and section 7.1 expects a clear and transparent valuation report. Check each criterion and keep the evidence.

Set the rotation rule in your valuation policy. EBA/GL/2018/06 (paragraph 196) expects rotation after two sequential individual valuations of the same property by the same appraiser; EBA/GL/2020/06 asks the bank to define the number. Record the rule you apply here.

If a check fails, do not simply note it. Decide whether the failure undermines the value: a lapsed professional indemnity policy may be cured by evidence of renewal, while a valuer who was instructed by the borrower or whose fee depended on the outcome cannot be cured, and the bank should commission a new valuation. Conflicts that arise inside the bank matter as much as those of the valuer. An internal valuer who reports to the business line that originated the loan is not independent of the credit decision, and a relationship manager who selects the valuer from the panel for a specific deal weakens the control the panel is meant to provide. Route instructions through the collateral valuation team.

5. Basis and method of value

State the basis of value the valuer used and the one the bank needs. For CRR purposes, value immovable property under CRR Art. 229(1) as amended by CRR3. The "property value" used for capital must not exceed market value and must exclude expected price increases. On revaluation it may not exceed the higher of the average value over the last six years (residential) or eight years (commercial) and the value at origination, unless a modification unequivocally increases the value, for example better energy performance or resilience to physical risks (point (e)). Read the consolidated text for the exact conditions. For accounting and enforcement, the bank also needs an estimate of the net amount it would realise in a sale within a stated period.

For an owner-occupied operational property, the security is the building without the borrower's business. Value it with vacant possession, using a notional market rent for the whole building, never the borrower's service revenue or its customer contracts, which end when the bank enforces.

The capitalisation calculation used in the Example:

where $V$ is value before the letting allowance, NOI the stabilised net operating income on the notional market rent and $y$ the all-risks capitalisation yield. The value with vacant possession is $V$ less the letting allowance.

6. Assumptions and market evidence

List the assumptions that drive the value and the evidence behind each. Then check the comparable transactions the valuer used: date, distance, size, lease profile and yield. Give your own view of whether the evidence supports the chosen inputs.

Weigh the evidence rather than counting it. A recent transaction of a similar building in the same submarket is worth more than several older or distant sales, and a sale with a long single-tenant lease says little about a multi-let asset with short leases. Adjust for time using a market index, and for quality, size and lease security with explicit, documented reasoning. Where evidence is thin, say so, and widen the sensitivity range you pass on to credit decisions. Compare the result with the bank's own data on recent recoveries and with the trend of the regional index since the previous valuation; a value that moved against the market needs an explanation in the report.

7. Reviewer findings

Review the report for completeness, clarity of method and assumptions, prudence of inputs and plausibility of the result. EBA/GL/2020/06 section 7.1 lists what a clear and transparent report should document, such as the approaches, key parameters and any circumstances that may affect value in the short term. Rate each finding and decide its effect.

Example sensitivity: at the reviewer's alternative yield of 7.25% the value would be 1,197 / 0.0725 - 600 = 16,510.3 - 600 = 15,910.3, which is 3.6% below the valuer's 16,500. The bank's policy tolerance for adjusting an external value is 5%, so the reviewer accepts 16,500 and records the sensitivity for the workout options analysis. At 7.50% the value would be 15,960 - 600 = 15,360, and at 6.50% it would be 18,415.4 - 600 = 17,815.4.

Escalate a disagreement that the valuer does not resolve. The policy should say who decides between the valuer's figure and the reviewer's figure, and in which cases the bank orders a second valuation from another panel firm. Never change the valuer's report yourself: the bank may rely on a lower value than the report shows, with reasons, but the report stays as issued.

8. Value relied on, haircuts and lending value

Record the value the bank relies on and the internal haircuts the policy applies to it. Back-test haircuts against realised sale prices at least annually (EBA/GL/2018/06 section 9.5) and update them when recoveries differ.

With $V$ = 16,500, $d_{\text{forced}}$ = 20% and $c_{\text{sale}}$ = 5%, the net realisable value is 16,500 x 0.80 x 0.95 = 12,540, which matches the recovery assumption in the workout plan.

Set haircuts by collateral type, location and loan status, and derive them from evidence: realised sale prices compared with the last market value, time from default to cash, and the costs of enforcement in each jurisdiction. Where the bank has little data, use conservative values and say so. Keep the haircut used for credit limits separate from the assumptions used in provisioning, because accounting estimates must be unbiased while credit policy may build in a deliberate margin of prudence.

9. Loan to value and eligibility

Eligibility checklist for immovable property collateral. Confirm each item against the consolidated CRR and record the evidence; a failed item can remove capital recognition.

For portfolios valued by indexation or statistical models, show the calculation per loan. Example (residential mortgage, EUR thousand): loan 240.0, value at origination 320.0 when the regional house price index was 112.0; index now 103.6, a change of minus 7.5%; indexed value 320.0 x 103.6 / 112.0 = 296.0; LTV moves from 240.0 / 320.0 = 75.0% to 240.0 / 296.0 = 81.1%. A move across an LTV band can change the standardised risk weight (CRR Arts 124 and 125) and the bank's LTV-based limits.

10. Monitoring and revaluation

CRR Art. 208(3) as amended by CRR3 requires the bank to monitor property values at least once a year for commercial and once every three years for residential property (point (a)), with more frequent monitoring where the market is subject to significant changes. Point (b) requires a review by an independent valuer when information indicates that the value may have declined materially relative to general market prices, and CRR3 added that ESG-related limitations count as such an indication; it also keeps a valuer review at least every three years for loans above EUR 3 million or 5% of own funds. New Art. 208(3a) allows advanced statistical models, developed independently of the credit decision, to be used for monitoring and for identifying properties that need revaluation, under conditions. Read the consolidated text before you set your policy. EBA/GL/2020/06 section 7.2 asks the bank to set monitoring frequency by property type, credit quality, development status, value, appraisal assumptions and market conditions, with higher frequency for properties under development, high LTV and weaker loans. EBA/GL/2018/06 section 9.2 expects an individual valuation when an exposure becomes non-performing and at least annually while it remains so, and an annual update of any indexation.

Statistical models used for monitoring or revaluation must meet the conditions in CRR Art. 208(3a) and the criteria in EBA/GL/2020/06 section 7.4, be sufficiently granular and back-tested, and should not be the sole means of revaluation when a valuer review is required. Govern them under Model Risk Management Policy (finance/model-risk-management-policy) and validate them using Model Validation Report (ai-data/model-validation-report).

Example next dates for COL-55120: quarterly index check 2026-12-31; individual revaluation 2027-09-15 (NPE annual); earlier if the regional logistics index falls more than 5% or if enforcement starts.

11. Movable property collateral

For movable property, the bank values at market value (CRR Art. 229(3)), checks liquidity and price volatility, and confirms legal enforceability (CRR Arts 199 and 210). EBA/GL/2020/06 section 7.1.2 expects a panel of external valuers for large and complex assets such as vessels, aircraft and plant, and section 7.2.2 allows statistical models and indices for monitoring. Record the asset-specific factors below.

For receivables, check debtor concentration, dilution, ageing, set-off rights and notification to debtors, and apply the bank's haircut grid.

12. Conclusion and sign-off

Common errors found in reviews of this kind include a valuation date that is later than the review date, a value that uses rents from leases not yet signed, comparables that the valuer did not verify, insurance cover below reinstatement cost, a charge registered over a different land parcel from the one valued, and indexation applied to a valuation that was already out of date. Check each of them before you sign, and update the collateral system on the same day so that capital, provisioning and limit monitoring all use the value you approved.

13. Glossary and references

13.1 Glossary

13.2 References

Standard and licence note

Based on Regulation (EU) No 575/2013 as amended, the EBA Guidelines EBA/GL/2020/06 and EBA/GL/2018/06 (EBA material may be reproduced with acknowledgement of the source; no text is reproduced here), Directive 2014/17/EU, 12 CFR Part 34 Subpart C and the US Interagency Appraisal and Evaluation Guidelines (US government works). RICS and IVSC standards are cited by name only; no content from them is reproduced or adapted, and this template is not affiliated with or endorsed by RICS, the IVSC, the EBA or any supervisor. The structure, wording, worked example and all figures are original; Fernhollow Bank and Quillmoor Logistics GmbH are fictional. Check the current official and consolidated versions of every cited text before use. Template licence: MIT.