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A Credit Policy sets the rules and standards for how a Swiss organization handles lending decisions and manages credit risk. It outlines who can receive credit, under what conditions, and how the organization evaluates creditworthiness - all while following FINMA guidelines and Swiss banking regulations.

This essential framework helps banks, financial institutions, and businesses make consistent lending decisions, monitor credit exposure, and maintain healthy portfolios. It typically includes specific criteria for credit limits, collateral requirements, interest rates, and steps for handling late payments or defaults - creating a balance between growth opportunities and risk management.

Swiss organizations need a Credit Policy when they start extending credit to customers or partners, especially before expanding lending activities. This becomes crucial when dealing with multiple credit decisions, increasing transaction volumes, or entering new market segments that require systematic risk assessment.

Financial institutions must update their Credit Policy when FINMA introduces new regulations, market conditions shift significantly, or internal risk metrics reveal gaps in current practices. It's particularly valuable during organizational growth phases, when standardizing credit procedures across departments, and after experiencing credit-related losses that highlight the need for stronger controls.

• Basic Commercial Credit Policy: Sets fundamental lending criteria and risk assessment guidelines for businesses, typically used by smaller Swiss banks and commercial lenders
• Retail Banking Credit Policy: Focuses on consumer lending rules, credit card issuance, and personal loan requirements under Swiss consumer protection laws
• Investment Banking Credit Policy: Covers complex institutional lending, securities financing, and large corporate credit facilities with enhanced risk controls
• Asset-Based Credit Policy: Details specific requirements for loans secured by assets like real estate or equipment, following Swiss collateral laws
• International Trade Credit Policy: Addresses cross-border lending and trade finance requirements, incorporating both Swiss and international banking standards

• Board of Directors: Approves and oversees the Credit Policy, ensuring alignment with Swiss banking regulations and corporate strategy
• Credit Committee: Reviews and implements policy guidelines, makes key lending decisions, and monitors compliance
• Risk Management Team: Develops risk assessment criteria, maintains policy updates, and tracks exposure levels
• Credit Officers: Apply policy guidelines daily when evaluating loan applications and managing client relationships
• Compliance Department: Ensures the policy aligns with FINMA requirements and Swiss banking laws
• Internal Auditors: Conduct regular reviews to verify policy adherence and effectiveness

• Risk Assessment: Document your organization's risk appetite, target markets, and acceptable collateral types under Swiss standards
• Regulatory Review: Gather current FINMA guidelines and Swiss banking regulations that affect your lending activities
• Internal Data: Collect historical credit performance metrics, default rates, and loss ratios to inform policy limits
• Stakeholder Input: Consult with credit officers, risk managers, and board members about operational needs
• Documentation Rules: Define required client documentation, credit evaluation procedures, and approval workflows
• Review Process: Establish monitoring procedures, reporting requirements, and policy update schedules

• Purpose Statement: Clear objectives and scope of lending activities under Swiss banking regulations
• Risk Parameters: Defined credit limits, risk tolerance levels, and exposure thresholds
• Evaluation Criteria: Specific requirements for creditworthiness assessment and scoring methods
• Documentation Rules: Required client information and verification procedures per FINMA guidelines
• Approval Process: Authority levels, decision-making hierarchy, and delegation limits
• Monitoring Framework: Portfolio review procedures and reporting requirements
• Default Management: Steps for handling non-performing loans and collection procedures
• Data Protection: Compliance with Swiss data privacy laws and information handling protocols

While both documents deal with credit relationships, a Credit Policy differs significantly from a Credit Agreement. The Credit Policy serves as an internal governance framework, while a Credit Agreement is a binding contract between specific parties.

• Scope and Application: Credit Policies provide organization-wide guidelines and standards for all lending activities, while Credit Agreements detail specific terms for individual loans or credit facilities
• Legal Status: Credit Policies are internal regulatory documents that guide decision-making, whereas Credit Agreements are legally binding contracts enforceable under Swiss law
• Parties Involved: Credit Policies bind internal staff and management, while Credit Agreements create obligations between the lender and specific borrowers
• Content Focus: Credit Policies outline risk assessment criteria and procedures, while Credit Agreements specify payment terms, interest rates, and default consequences for particular transactions