How to prepare annual credit reviews with an AI agent

Let the agent assemble the review pack and keep every decision with the approver. It gathers fresh financials, twelve months of account conduct, covenant history, security status and the KYC position, then drafts the review with every new fact marked as new. A named credit approver decides whether to renew, the risk grade, the limits and any conditions.

What is an annual credit review, and who owns it?

Most business lending is reviewed at least once a year. The review asks whether the borrower still fits the bank's appetite, whether the grade is still right, whether limits and pricing still make sense, and whether the security still covers the exposure. It ends with a decision to renew, amend, reduce or exit.

The relationship manager usually owns the review and presents it. Credit risk, or a holder of delegated lending authority, approves it. Portfolio management tracks review dates, because an expired review means the bank is lending on an out-of-date view. The agent sits underneath all of this, doing the gathering that turns review season into a backlog.

What does the agent prepare?

• The calendar. Every facility with its review date, flagged well in advance, with the documents needed listed for the RM to request.
• Spread financials. The latest accounts entered into the bank's spreading template, set against prior periods, with ratios calculated.
• Account conduct. Twelve months of balances, limit usage, excesses, returned items and turnover through the account.
• Covenant history. Each test date, the result and any waivers granted.
• Security status. Valuation dates, insurance renewals and any charges that need updating.
• KYC position. Whether the customer's due diligence is current, using the same checks as a refresh. The KYC refresh checklist for agent-assisted reviews lists them.
• Group exposure. All connected borrowers and their combined limits.
• The draft review. In the bank's format, describing what changed, with a proposed grade and recommendation clearly labelled as proposals.

Fresh bureau data is often part of the pack. Pulling it is a separate capability; whether an agent can run a credit check depends on consent and purpose, and it should be granted on its own.

How does the work divide?

1. Agent, depth 1: flags due reviews and lists required documents.
2. Agent, depth 2: drafts the document request for the RM to send.
3. Agent, depth 1: assembles the evidence: financials, conduct, covenants, security, KYC, group exposure.
4. Agent, depth 2: drafts the review with proposals marked.
5. Person, relationship manager: edits and owns the narrative. The RM adds what the numbers cannot show, such as the borrower's plans and the quality of management.
6. Person, credit approver: decides renewal, grade, limits, pricing and conditions.
7. Agent, depth 1: records the outcome and sets the next review date and any conditions to track.

Where do the agent's limits sit, and what is recorded?

The agent writes nothing to the credit system's grade, limit or pricing fields. It does not update the borrower's credit file either; that is a separate question covered in whether an agent can update a customer's credit file.

Each draft review is filed as held, with the approver's decision attached. Every figure in the pack carries its source and provenance class: management accounts from the borrower are declared, audited accounts are declared but audited, your own conduct data is sealed, bureau data is external. The approver can see at a glance which parts of the picture rest on the borrower's word.

The record also shows what was carried forward from the prior review unchanged. That is how you catch a narrative that has not been refreshed in three cycles.

Where does it usually go wrong?

Roll-forward. The easiest review to write is the previous one with new numbers. Reviews that copy old commentary hide change. Have the agent mark every paragraph as new, updated or carried forward, and show the approver the carried-forward count.

Stale security. The valuation in the pack is four years old and nobody noticed because the field was filled. The agent should flag valuations and insurance past the bank's refresh period, not just report their values.

Group exposure missed. A director's other companies borrow too. The review looks fine for one entity and wrong for the group. Connected party matching needs its own checks and a person to confirm doubtful links.

Proposals read as decisions. A proposed grade, written confidently, gets approved without challenge. Keep proposals visually distinct, and track how often approvers change them. If the answer is almost never, ask whether the approvers are reading.

Spreading errors carried through. A misread line in the accounts flows into every ratio. The steps for producing the numbers are set out in preparing credit memos for underwriters, and the same checks apply here.

What should you measure?

• Reviews overdue at month end. The backlog the agent exists to clear.
• Time from documents received to review submitted.
• Approver changes to proposed grades, by direction.
• Carried-forward paragraphs per review.
• Reviews returned for missing evidence.

The limits on all bank agents are in AI agents in banking. Policy documents go through a similar annual cycle, and the pattern there is described in running the annual policy review with an agent.