《国际金融课件》unit 7 loans

1、LoansDefinition & Categories of LoansThe Credit ProcessPost-Disbursement Management QuestionsHave you ever applied for a student loan? If you have, is it easy to ask for or not?2. Would you consider banking loan to purchase personal house?I. Definition Categories of Loans1. Can you translate the def

2、inition?A loan is a sum of money advanced to a borrower, to be repaid at a later date, usually with interest.Legally, a loan is a contract between a buyer and a seller, enforceable under relevant law.2.Do you know these loans? By MaturityBy maturity, loans can be divided into two broad categories. T

3、hose with maturity of one year or less are called short-term loans while those with maturity exceeding one year are called medium-or long-term loans.Short-term loans are often used to satisfy working capital needs, to fill clients short-term needs for funds for projects within the business scope . M

4、edium-and long-term loans are often used to finance fixed asset investment.By Interest RateThose with a rate of interest that varies with the market, more particularly with an agreed reference standard are called floating rate loans. E.G. LIBOR. Fixed rate loans generally refer to loans on which the

5、 borrower receives a predetermined and unchanging rate of interest on the principal.By Number of LendersA bilateral loan is a loan arranged by a bank between a borrower and itself. A syndicated loan is a loan extended by a group of banks to a corporate borrower. These syndicated banks share credit i

6、nformation and credit risk.By Type of Borrowers Those with borrowers that are either companies or institutions are called corporate and institutional loans. Those with borrowers that are individuals are called personal loans. By Nature of Common UsagesWorking capital loan is a short-term business lo

7、an financing the purchase of income-generating assets, principally inventory. Fixed asset loans refer to loans granted by a bank to meet the demands of enterprises in their investments in fixed assets.By Nature of Particular Usages Real estate development loans for either commercial or residential r

8、eal estate development are granted to a qualified property developer. A mortgage loan for residential houses is granted to a borrower to purchase a residential house(s), for which he/she owns the proprietary, including first-hand house(s), second-hand house(s) and economical houses provided by the g

9、overnment.Agriculture loans are similar to commercial &industrial loans in that short-term credit finances seasonal operating expenses, in this case those associated with planting and harvesting crops.Education loans are made for college or vocational training expenses, often at a below market rate.

10、Education Loan in America Students who cannot afford to pay tuition do have ways to attend school. Such a student can ask the school or state government for a grant, which is money that he or she does not have to pay back. Or the student can ask the federal government for a student loan, which is mo

11、ney that he or she must begin to pay back after graduation college.3. Introduction of Major Loan CategoriesB. Syndicated LoanDefinition Features Functions of lead managerFee and costDerivatively syndicated loansi. Definition: A syndicated loan is a loan arranged by a lead bank among a borrower, itse

12、lf, and a group of other banks that are parties to the original credit agreement.ii. Features : large credit developed largely market agent bank finance major project iii. Functions of lead manager information memorandum preparation documentation syndication function agency functioniv. Fee and Cost:

13、 An arrangement fee is normally charged for the arrangement of the loan agreement, information memorandum, syndication and signing ceremony.v. Derivatively syndicated loans loan sale asset securitizationphrases syndicate syndication sovereign syndicated loans loan sale asset securitization selldown

14、Knowledge points 1.What is a syndicated loan?2. What are functions of the lead bank?3. How many borrowers in a syndicated loan?4. What are two forms of derivatively syndicated loan?Export CreditA. ConceptB. TypeC. ProcedureA. ConceptExport credit is government guaranteed lending channeledthrough a c

15、ommercial bank to support export.A. Export credit: 1.the essence-cross-border loan 2.the guarantor-government credit agency 3.the provider-exporters bank 4.the purpose-to support domestic export 5.financing target-capital goods 6.the term-long(1-5years; over 5years)B. TypeBuyer Credit: Supplier Cred

16、it: Loan extended to supplierLoan extended to importerLoan extended to importers bankC. Procedurea. Loan extended to importerExporterImporterExporters BankImporters BankExporter Credit Agency1.Supply Contract2.Application2.Application3.Loan Agreement3.Guarantee Letter4.ApplicationGuaranteeGuaranteeb

17、. Loan extended to importers bankExporterImporterExporters BankImporters BankExport Credit Agency1.Frame Agreement2.Supply Contract3.Application3.Application4.Loan Agreement5.Application6,LoanGuaranteeGuaranteec. Loan extended to supplierSupplierImporterSuppliers BankImporters BankExport Credit Agen

18、cy1.Supply Contract2.Application2.Application4.Loan Agreement5.ApplicationGuaranteeGuarantee3.Guarantee Letterphrases export credit buyer credit supplier credit letter of guarantee installment capital goods Knowledge pointsHow can you understand export credit?How many types of export credit?Can you

19、describe the procedures of buyer credit and supplier credit respectively?C. BOT (Build-Operate-Transfer)ConceptAimPartiesObligations of Each PartyChart ConceptBOT is a typical form of project financing.The vehicle company carries out theconstruction and operation of the project, andthen the operatio

20、nal project is transferred to the government agency.Aim1.Minimize the impact on governments capital budget.2.Introduce increased efficiency3.Encourage foreign investment4.Introduce new technology.d. Obligations of Each Party 1.Sponsor-发起人 Establish Vehicle Co.; Provide support for the Vehicles perfo

21、rmance; 2.Vehicle Co.-项目公司 Construct and operate the project. 3.Government Agency Provide support Accept the projects transfer. 4.Lender Provide financing e. ChartSponsorVehicle Co.Government AgencyLenderProjectestablishconstruct and operatetransferfinancePhrases project financing vehicle company tu

22、rnkey project installation capital budget concession compensation fetter detriment inherit coincideKnowledge pointsCould you describe the definition of BOT?Dou you know some parties involved in BOT? II. The Credit Process1.Main Consideration in Credit Planning2.Basic Process of Individual Loan3.The

23、Key Factors and Commonly Used Methods of Credit Analysis4.Different Types of Security for LoanBefore lending money to a borrower, what should a lending officer consider?Main Consideration in Credit PlanningA. Assets and Liabilities ManagementB. Profitability and Budgetary Controlc. Liquidity RatioD.

24、 Governments Macro-economic Policy A commercial bank must maintain enough capital from some channels. Then according to requirements on portfolio management, A commercial bank designs a reasonable budget, to gain profit and keep appropriate credit loss allowance. During this period, liquidity ratio

25、should be taken into account.There is a conflicting objective between profitability and liquidity. If the bank leaves more liquid funds for withdrawal or settlements or meeting demands of loan, which of course leads to less profit. Conversely if reduce liquidity, the safety cannot be assured althoug

26、h more profits could come into bank. TenorRisk RatingIndustryObligorConcentrationWhat is significance for enough liquidity?Therefore the commercial bank should balance the relationship between liquidity and profitability. In addition, governments macro-economic policy should not be ignore.The commer

27、cial bank must be clear which industries are encouraged and which are not.So far, in china there are at least 6 sectors prohibited to develop, such as steel & iron, cement, site electrical facilities which are excess capacity industries. Now the country is actively supporting low-carbon and environm

28、ental industries. So the flow of the loan must be consistent with policy for economic development. Or it will lead to waste of financial resources. Who can say out basic process of an individual loan?2.Basic Process of an Individual LoanPost-disbursement ManagementLoan DisbursementReview and Approva

29、lApplication AcceptanceInvestigation and AssessmentBusiness DevelopmentCredit AnalysisCredit ExecutionCredit AdministrationCredit Review5PsFinancial ratiosSecurities1.Credit Review2.Early Warning Signals3.Loan Classification by Risk4.Non-performing Loans Management and RecoveryC.5Ps Model-people-pur

30、pose-payment-protection-perspective D. Financial Ratio Analysis liquidity ratio Current ratio=current assets / current liabilitiesQuick ratio=quick assets / current liabilitiesInventory reliance=(current liabilities-quick assets) / inventoryActivity RatioSales to asset ratio Days accounts receivable

31、s collection period =accounts receivables / average daily credit salesInventory turnover=cost of goods sold / inventoryWorking capital turnover=net sales / working capitalLeverage RatiosLeverage=total liabilities / net worth or=senior liabilities / capital fundsLeverage=total liabilities / tangible

32、net worth or=senior liabilities / tangible capital funds Profitability Ratiosnet margin=net income / net salesReturn on total assets=net income / total assets Phrases liquidity ratio current ratio quick ratio inventory reliance activity ratio leveraged ratio net margin post-disbursement management c

33、redit analysis Knowledge points 1. Try to describe credit process. 2. What are 5Cs? 3. What are 5Ps? 4. Try to keep in mind the meaning of each financial ratio.4.Different Types of Security for LoanLien：留置Pledge：质押Mortgage：抵押Hypothecation: 不转移占有权的抵押 Several Ways of Taking Security loanborrower lende

34、r lien ownership possession, no sale power pledge ownership possession, sale power mortgage ownership, possession power of sale hypothecation ownership, possession TypesRightsPartiesIII. Post-disbursement Management1.Credit Review2.Early Warning Signals3.Loan Classification by Risk4.Non-performing L

35、oans Management and Recovery1.Credit ReviewClient reviewCredit risk reviewSecurity review2.Early Warning SignalsEarly warning signals-financialEarly warning signalsnon-financialEarly warning signals of managementEarly warning signals of operationEarly warning signals of the relationship between the

36、enterprise and the bank 3.Loan Classification by RiskPass: 正常类Special mention：关注类Substandard：次级类Doubtful：可疑类Loss：损失类4.Non-performing Loans Management and RecoveryA. Work-out unitB. Loan and loan rolloverC. Debt-equity swaps and loan salesD. Securitization of non-performing loanE. In-court bankruptcy

37、/liquidation proceedingsF. Exercise of collateralG. Writing-off bad loansTest for Part 6I. Translate the following phrases into Chinese. 1.overdraft 2.loan commitment 3.buyer credit 4.consumer credit 5.Lien 6.real estate loan 7.activity ratios 8.quick assets 9.leverage ratios 10.vehicle companyII. T

38、ranslate the following sentences into Chinese. 1.Overdraft is an agreed line of credit operating directly through the current account. 2.Export credit is government guarantee lending channeled through a commercial bank to support export. 3.Every syndication has an agent bank to administer the loans

39、from signing to repayment. 4.A useful framework for sorting out the facts and opinions in credit analysis is the”Five P” approach: people, purpose, payment, protection and perspective.III. Justify ”True” or “False”. 1.In the case of an ordinary lien, the borrower is still the owner of the property.

40、2.Liquidity ratios measure the companys ability to meet short-term obligations through the cash conversion cycle. 3.Profitability ratios measure managements ability to maximize revenues, control expenses and improve profitability. 4.Derivatively syndicated loans take two formsloan sale and asset securitization.IV. Choo