Here you can find out what the requirements of the banks are. Loans to start-ups that do not need to be repaid immediately. Often, credit, income and Credit bureau information requirements are lower. Requirements for an immediate microcredit. Suddenly you have more money, you can also repay the loan immediately.

Liquidity management is an essential component of overall bank management. Liquidity management is a key component. However, awareness of the use of cash has changed significantly in recent years. The financial market crisis in 2007 in particular has highlighted the dangers associated with the liquidity situation and has in many ways rethought. Above all, the so-called financing liquidity risk in the sense of a refinancing risk has come into the focus of the considerations.

This is the residual risk that it will no longer be possible to raise liquid funds at short notice or only at higher market prices. Therefore, the liquidity situation is increasingly seen from a value-oriented perspective. This development is also reflected in the changed regulatory requirements. In summary, traditional liquidity management has changed over the years to include liquidity risk management.

Digital claims management helps you comply with the most demanding governance regulations.

Digital claims management helps you comply with the most demanding governance regulations.

To ensure consistent risk management practices and to harmonize the definition of leveraged transactions, the Fine Bank published its Guidance on Leveraged Transactions last month. It has been binding for all institutions supervised by the Fine Bank since the deadline of 13 December 2017. Leveraged transactions are so-called leveraged transactions – especially loans with a relatively high default risk.

In order to avoid negative influences on the financial system, these loans have been subject to extensive governance rules which require a multi-level approach by the institutions concerned. Leverage transactions have become more and more popular as a financial instrument in recent times. This is illustrated by the example of leveraged loans, which, according to a general definition in the private customer magazine, are special syndicated loans to sub-investment companies (company rating BB +).

The current background for this is the renewed increase in leveraged transactions, as was already apparent before the financial market crisis in 2008. For example, the markets for leveraged loans are booming both in Germany and in Europe. According to Bloomberg, this form of lending rose by 52% in 2017 compared to the previous year and reached a record level after the former crisis.

The DLB’s Leveraged Transactions Directive thus builds on the current trend towards funding with an increased debt-to-GDP ratio and endeavors to prevent recurrence of undesirable developments through stricter and more consistent regulatory standards for monitoring and control. All relevant institutions are required under the Directive to establish an institution-specific definition of leveraged transactions subject to regular self-regulation.

In this definition, the credit institution should consider the DLB’s underlying considerations: A leveraged transaction occurs when the debtor’s total debt after debt financing exceeds its EBIT (earnings before interest, taxes, depreciation and amortization) by four times, or when most of the debt the debtor is in the hands of lenders. For example, such a loan does not exist if it is granted to a natural or other financial institution.

For this type of loan, strategically important definitions, such as The risk appetite of the credit company. For syndicated leveraged transactions such. As the above-mentioned leveraged loans, even more specific rules apply, such. B. a debt limit. In this way, the proper implementation of own procedures in accordance with the guidelines should be checked and ensured.

In addition, the Guide sets out some requirements for regular and comprehensive reporting that highlights all developments and features related to a bank’s leveraged transactions. The publication of the Directive sets out, inter alia, the following framework and procedures for new lending, the monitoring and management of long-term leveraged transactions: Lending should undergo an appropriate and specific credit approval procedure for leveraged transactions.

Credit institutions are required in several places

Credit institutions are required in several places

Detailed checks and evaluations in the sense of a due diligence (risk assessment) are to be carried out by the initiator in the course of the lending as well as with the new presentation, renewal, change or refinancing of existing transactions by the initiator. It is important to examine the effects of the stress scenarios, especially with regard to the ability to repay debt. To what extent does digital receivables management help meet these requirements?

The requirements for leveraged transactions are not limited to a single business area, the credit institutions are required in several places: in new and old business, but also in the administration and document. Digital receivables management allows cross-departmental support and traceability of processes. The focus of the policy is to create dedicated processes for leveraged transactions that meet the increased risk potential associated with this type of loan.

Basic process flows of any kind can be adapted in digital form and flexibility to the specific features of leveraged transactions – from different application procedures to different processing and specific approval processes. The institution-specific processes are thus clearly and comprehensibly defined. Due to the digital design of the processes, these are immediately visible and realizable for every user – whether in the front office or back office.

Digital receivables management enables financial service providers to secure a broad range of processes. The procedures pay special attention to observation and early detection in order to identify and manage potential hazards at an early stage. Due to the increasing automation of the often MS Office based processes all process data are available for the implementation of leading indicators.

In addition to the risk-based assessments, these are also provided for performance analysis – taking into account the various information needs for controlling or supporting business processes. The required periodic review by Internal Audit focuses on traceability and openness.

In addition, electronic claims management makes sensitive areas such as data protection. The DLB’s corporate governance requirements for leveraged transactions are high, leading to significant changes in the risk management of the credit institutions concerned, in particular as regards the requirements for auditing, supervision and reporting. In general, the financial industry needs to be responsive to risk scenarios involving in-depth regulatory or regulatory action, which can lead to extensive governance regimes.

Digital receivables management enables credit institutions to implement the often cross-departmental requirements of these regulations quickly and easily. Starting with the documentation of individual processes up to observance of strict data protection requirements, the financial service providers must be prepared for the responsible handling of their dangers and the associated information.

Leave a comment

Your email address will not be published. Required fields are marked *