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115 Cards in this Set

  • Front
  • Back
Account
Any one of the various depository accounts available to a bank's customers, such as a checking account, certificate of deposit, savings account, etc..
Account Officer
The primary person responsible for maintaining the bank's overall relationship with a borrower client. Aka. Relationship Manager, Account Executive
Accountability
System ability to record the person, (with time and date) responsible for initiating or approving a transaction
Accrual Accounts
Accounts that are affected by future cash receipts and payments. Accrual accounting records the financial effects of transactions in the period in which they occur.
Administration Fee
Fees paid by the borrower to the bank for administering a credit facility(e.g. line of credit, revolver,etc). It is usually paid quarterly, in arrears.
Administrative Agent
Some deals may have more that one agent bank. The administrative agent is responsible for ongoing administration of the deal. Disperse info on drawdowns, rates,due dates, reductions..
Advance Billing Days
Number of days in adance that a customer is billed for charges, such as interest and fees. Any changes to actual amount owed results in a corrected bill.
Advised Line of Credit
Typically short term, non binding indication between bank and customer of maximum amount to lend for a specified time. Can be declined at sole discretion of the bank.
Advisory Fee
Fee charged to a customer for providing financial or other advice. Usually payable quarterly, in arrears.
Agency Fee
Fee paid to Agent Bank by the borrower.Usually payable quarterly, in arrears.
Agent Bank
In a syndicated deal, the bank that coordinates all activities with the borrower and the bank group, such as negotiaon of credit agreement, legal documentation, administration. Co-Agents are common.
All-In-Rate
The interest rate applied to a particular borrowing. From the borrower perspective, it is composed of the sum of the reserved adjusted base rate plus the applicable spread. From the bank's perspective, it is the banks cost of funds plus some spread (also known as the Effective Rate)
Amendment
Legal document that modifies the original credit agreement or letter of credit. Modifications may range from minor technial changes to major restatements of the agreements terms and conditions.
Amendment Fee
A fee charged to the borrower for amending a credit agreement
Annex
An attachment to a legal agreement between bankan investor which states specific closing information regarding a participation/assignment. i.e. funding amount, rates, etc..
Annual Percentage Rate
The percentage of interest accrued on a loan over the course of a year
As-of Match Funding
The interest rate provided by the treasury group when it is informed of the rollover of a match-funded loan after the re-pricing date.
Asset
From a bank portfolio management perspective, an asset refers to lans/facilities/deals made by the bank which will either be retained on the bank's books or sold in the market. The decision to hold or sell as asset is affected by many factors, including risk and yield, strategy, level of interest rates, etc..
Assignee
Legal entity that buys all or part of a syndicated facility from a primary member. Assumes all rights and responsibilities, proportionally. Different from Participant.
Assignment
Formal, legal transference of rights and responsibilities from assignor to assignee. Creates direct relationship to borrower and assignee.
Assignment Agreement
Formal, legal document that evidences an agreement
Assignor
Legal entity that, as primary member of a syndicated facility, sells all or part of its share to another party, thereby relieving itself of all rights and responsibilities with respect to the sold portion.
Audit Trail
System ability to trace the status and contents of transaction records through output, processing and source.
Authority Levels
The various approval levels established in the system based upon transaction type and function.
Balloon Loan
Term Loan whose repayment terms call for no interim installment payments of principal. Scheduled interest payments are made at established intervals.
Balloon Payment
For Term Loans, this reers to a large, final princiupal payment at maturity. Entire amount, or final payment in a stream of smaller, regularly scheduled installments.
Bankers Acceptances
Financial instrument is a form of discount financing involving letters of credits. The L/C beneficiary is paid a discounted amount of a fully executed L/C, based upon a predetermined financing period. The buyer of the BA receives the full amount of the draft at maturity (end of financing period).
Base Rate
The rate option chosen by the borrower to which a spread is added to obtain the All-In Rate. Can be a floating rate that can vary day-to-day, or a cost of funds are that is repriced at set intervals.
Batch Controls
Item counts, proof totals or other computational methods to control input into a system. Goal is to ensure processing of all source documents.
Beneficiary
For StandBy Letters of Credit, SBLC, the beneficiary is the payee. All changes to SBLC by the borrower must be approved by the beneficiary.
Bid Price
Price offered by those entities wishing to purchase a particular asset, such as loans, stocks, bonds, etc..
Book
See Deal Prospectus
Book Balance
The amount recognized by the bank on its internal records as being owed by the borrower. This amount includes all accrued interest to date and excludes any charged-off portion of the loan. Can be used to restructure debt or recover unpaid amounts.
Book Value
For loans, the original borrowed amount less any charge-offs, less unamortized feees. For discounted loans, refers to the full loan amount, the discount is not edducted.
Borrower
ANy legal entity that obtains funds from a the bankfor a period of time for some consideration. The borrower usually signs a note as evidence of the indebtedness.
Break-Funding
Costs associated with prepayment of a match funded loan or sale of match funded loan between repricing dates. Possibility of redeploying funds in a lower yielding asset may reduce the banks spread. The loss may, or may not, be passed on to the borrower. The gain is yield is never passed on.
Broker
A person or firm that matches sellers of financial instruments with buyer of those instruments for a profit in the form of a fee. A brokers does not maintain an inventory.
Buy Request List
Listing of deals that various dealers and investors are seeking to purchase.
Certificate of Deposit (CD) Rate
Rate setting for this pricing option is on the same day of the loan and is usually set for 30, 60, 90 or 180 day periods. The rate quoted by the funding desk is already adjusted for reserves; only the applicable spread needs to be added to deter ine the All-In-Rate
Charge-Off
The portion of the loan that the lender believes will not be repaid by the borrower and has written off against the loan reserve, therby reducing the book value of the loan.
CHIPS Code
A unique code which identifies a customer to the Clearing House Interbank Payment System for wire transfer purposes
Circle
The designation of a anticipated loan sale once a commitment letter is received from the investor confirming the dollar amount committed, pricing, etc. It is highly unusual for a circled deal not to close. Closing occurs when the investor funds the commitment in accordance with the terms of the Assignment Agreement or Participation Agreement.
Circled Amount
The share of the facility to which an investor has committed. While the transaction has not yet formally closed with the execution of all necessary documentation, the bank and investor have verbally agreed to all terms and pricing of the sale and the investor has provided a commitment letter confirming the dollar amount, pricing, etc.
Clawback Fee
A surcharge paid by the borrower for accessing a part of a commitment that was held in reserve. This arragement arises when a borrower negotiates to split the funds available under a revolving credit into two tranches: an ävailable"and an ünavailable"portion. This termination strictly refers to the commitment fee applied to the two tranches and in no way inhibits the borrower from drawing down funds under either tranche. The commitment fee on the available portion is higher than that on the unavailable portion. However, if the borrower decideds to access the unavailable portion, the commitment fee on those funds usually increases to some premium, retroactive to some point in the past.
Closing Fee
See Syndication Fee
Co-Agent
See Agent Bank
Collateral
The tangible and/or intangible assets used to secure a loan in the event of non-payment by the borrower. These items may be market-priceable such as stocks, bonds, and commodities, or may require special valuations such as real estate, patents, accounts receivable, etc..
Collateral Deficiency
The shortfall between the outstanding amount of a loan (or a percent of a loan requiring collateral) and the current value of the collateral held by the bank to secure that loan.
Commission
With respect to an SBLC, the fee that is based on a percentage of the total amount of the letter of credit outstanding, typicaly billed to the borrower quarterly, in arrears.
Commitment
A facility that has an underlying contractual agreement between the bank and the borrower to lend a specific dollar amount for a specific period of time, subject to the terms and conditions of a loan agreement. Under a commitment, the bank has a legal obligation to fund any loan request, providing that the borrower is in compliance with the loan agreement.
Commitment Fee
See Syndication Fee
Commitment Movement Amount
Accounts that are affected by the movement in a commitment amounts or usage
Competitive Bid
A drawdown option that may be available under a credit agreement allowing the borrower to seek bids from all members of the bank sydicate on a cost of funds pricing basis different from any contractual pricing formula contained in the credit agreement in order to obtain the lowest possible rate. Under this option, banks can bid to lend more or less than their pro-rata share, or elect not to bid at all. The borrower meets its funding needs by accepting the lowest bids up to the amount required. Typically, the agent bank running the competitive bid must submit its bid one hour in advance of the other banks. Only the bank(s) winning the bid fund the loan; however, borrowings under the competitive bid option reduce availability by the amount of the borrowing and reduce each bank's unused commitment fee in the ration that the borrowing bears to the total amount committed under the facility.
Competitive Bid Auction Fee
The fee charged by the administrative agent to the borrower for running the competitive bid auction (usually paid each time the auction is run).
Compliance Certificate
A certificate prepared by the borrower on a regular basis as outlined in the credit agreement and delivered to the bank group stating that the borrower is in compliance with all of the terms and conditions of the credit agreement and that no event of default has occurred. The compliance certificate is signed by an authorized representative of the company, typically the chief financial officer or treasurer.
Confidentiality Letter
The letter a prospective investor signs in order to receive a Deal Prospectus. This letter states that the prospective investor agrees to keep all of the information confidential.
Contingent Liability Account
An account affected by a change in a contingent liability, such as a standby letter of credit.
Contra
An account used to post offsetting debit or credit entries.
Conversion
1. The conversion of a loan from one pricing structure to another

2. The conversion of a revolver to a term loan
Corporate Entity
A stand alone legal entity that functions independently of a parent corporation.
Cost of Funds
Represents the cost to the bank (inclusive of reserve adjustments and exclusive of spreads) to raise a certain amount of money for a specific period of time in order to fund a loan request. This activity is handled by the bankk's funding desk.
Credit
See Facility
Credit Agreement
The legal document (contract) that states all the terms and conditions of a specific deal/facility including amount, rate, tenor, facility type, etc. The document is signed by the borrower and the primary lenders(s), one of which is usually the administrative agent.
Credit Facility
See Facility
Credit Watch List
Any one of the various lists maintained by different areas of the bank to track customers (e.g. borrowers, investors, guarantors, syndicate members, etc) which are considered to be at financial risk.
Customer
Any legal entity that has or has had a business relationship woth the bank. Customers can play many different roles simultaneously. Although only one entry for this customer exists in the database, it reflects the various relationships that this customer has or has had with the bank. Overall, these customer roles fall into one or more of the following categories:

Origination
- Borrower
- Agent
- Co-Agent
- Syndicate Member
- Beneficiary
- Guarantor

Distribution
- Participant
- Assignee

Loan Trading
- Buyer
- Assignor
- Participator
- Dealer
DDA
An acronym for a Demand Deposit Account- commonly known as a checking account - offered by a commercial bank. Funds on deposit in a demand deposit account can be withdrawn at any time for any reason without any prior notification.
Daylight Overdraft
An intra-day overdraft on a checking account that is rectified by the end of the day. This situation commonly results when a client wishes to wire transfer funds to another institution during the day without having sufficient funds in its account. Since the client expects sufficient funds from another source to be credited to the account later in the day, the bank will usually accommodate the customers request. If sufficient funds are not received by the close of business, the account will be listed as overdrawn.
Deal
One or more financial arrangements structured for a company or group of companies by a bank or group of banks to meet the company's financing needs. A deal can range from the simple (single line of credit for a single purpose), to the complex. The 'deal'is not a legal concept; rather it is the term used to describe the financing solution structured to meet a customer's needs.
Dealer
A person or firm that buys and sells financial instruments for a profit. A dealer maintains an inventory of these financial instruments in order to readily meet market needs. (Differ from Broker).
Deal Prospectus
This document, given to all prospective investors, includes confidential and background information about the borrower, credit terms, and general legal information concerning the deal/facility/loan being sold. (Also known as the 'Book').
Deal Syndicate
See Syndicate
Demand Loan
A loan made outside of any established credit facility that has no fixed maturity date, but which is payable to the bank upon demand. Demand loans can be called by the bank at any time for any reason.
Direct Obligation
Any financial instrument or contract that directly binds one party to another (e.g. a bankto a shareholder or depositor). Examples include shares of common or preferred stock; bonds; commercial paper; certificates of deposit; savings; checking, and other bank deposits; fed funds borrowed; other purchased or brokered funds, etc.
Discount Loan
A loan where the interest and fees are deducted from the loan at the time it is made. At maturity, the borrower repays the full face value of the loan.
Documentary Letter of Credit
A financial instrument issued by a bank for the account of one of its clients on behalf of a beneficiary. Used primarily to facilitate trade, the documentary L/C acts as a payment mechanism by which the established credit standing of the bank is substituted for that of its client. The bank will pay all draws against the documentary letter of credit by the beneficiary as long as the documentation presented is in order. Any draws under the letter of credit are either deducted from the client's account with the bank or are funded by a loan or bankers's acceptance.
Draft
An order in writing requesting that payment be made under a standby letter of credit.
Drawdown
The process whereby a borrower receives funds from the lender in response to a loan request, This process may be specifically regulated as part of an overall credit agreement or may simply be handled in accordance with the bank's established policy.
Drawer
The legal entity that is drawing down funds. Commonly know as the 'Borrower'.
Effective Rate
See All-In-Rate
Documentary Letter of Credit
A financial instrument issued by a bank for the account of one of its clients on behalf of a beneficiary. Used primarily to facilitate trade, the documentary L/C acts as a payment mechanism by which the established credit standing of the bank is substituted for that of its client. The bank will pay all draws against the documentary letter of credit by the beneficiary as long as the documentation presented is in order. Any draws under the letter of credit are either deducted from the client's account with the bank or are funded by a loan or bankers's acceptance.
Draft
An order in writing requesting that payment be made under a standby letter of credit.
Drawdown
The process whereby a borrower receives funds from the lender in response to a loan request, This process may be specifically regulated as part of an overall credit agreement or may simply be handled in accordance with the bank's established policy.
Drawer
The legal entity that is drawing down funds. Commonly know as the 'Borrower'.
Effective Rate
See All-In-Rate
Equity Investments
Consist of investments made by the bank holding companies in the equity portion of a highly-leveraged financing package either indirectly through an investment pool or equity fund, or directly through specific transactions.
Euro Rate
Rate setting is generally two business days prior to the effective date of the borrowing and is usually for 1, 2, 3 or 6 month periods. This unadjusted rate must be adjusted for reserves before being quoted to the borrower. A spread is added to the adjusted rate to get the All-In-Rate
Expiry
Date on which a facility expires. It also represents the date until which fees are accrued. (See also Post Expiry Fees).
Expiry Date
See Expiry
Expiration Date
See Expiry
FASB 52
An acronym for Financial Accounting Standards Board statement of accounting practices number 52. FASB 52 governs foreign currency translation and establishes standards for reporting foreign currency transactions in the financial statements of the reporting enterprise. It also addresses the standards for translating foreign currency financial statements into US Dollars.
FASB 77
An acronym for Financial Accounting Standards Board statement of accounting practices number 77. FASB 77 specifies that the sale of receivables with recourse should under certain conditions be reported by the transferor as a liability and under certain conditions as a sale. The business of most banks is such that sales of receivables are made without recourse.
FASB 91
An acronym for Financial Accounting Standards Board statement of accounting practices number 91. FASB 91 governs accounting for non-refundable fees and costs associated with originating or acquiring loans and the initial direct costs of leases.
Fed
Abbreviation for the Federal Reserve Bank
Fed Funds
Loan of funds immediately available from reserve accounts at any Federal Reserve Bank. These loans are typically overnight transactions where one bank lends its excess reserves at the Fed to another bank with deficit reserves. These funds are traded freely in the market.
Fed Funds Line
Line of credit established by one bank to lend Fed Funds to another bank in the overnight Fed eral Funds market.
Fed Funds Rate
The market rate of interest charged on Fed Funds. This rate is freely floating anad can become volatile at the end of the calendar quarter. In a credit agreement, this rate can be used as a basis for a pricing option to which a spread would be added.
Fedwire Code
A unique code that identifies a customer to the Federal Reserve Bank for wire transfer purposes.
Fee Type
A fee can be charged for a variety of reasons. A descriptive fee type is associated with the fee to explain why it is being charged. Usage fees on commitments, and late fees on delinquent loans are two examples.
Fixed Fee
A non-variable fee expressed as an absolute dollar (or other currency) amount.
Fixed Rate Loan
Any loan tied to an interest rate that is fixed to maturity or until the next rollover date. Typically, these loans are tied to a match funded rate (e.g. 1 month LIBOR, 90 dat CD, etc).
Fixed Rollover Date
With respect to an SBLC, the date upon which the SBLC is automatically extended to the next expiry date. This extension is usually an annual occurrence.
Floating Rate Loan
Any loan ties to a base rate that may fluctuate over the life of the loan. Typically, these are loans that are tied to a bank's prime rate or some other market rate (e.g. Fed Funds, Money Market, etc).
Fund Type
The type of funding used in a match-funded loan (e.g. Euro, LIBOR, CS, etc).
Funding Desk
The area within the bank's treasury department that is contacted by the platforn for indicative rates, cost of funds, funding alerts (new bookings, repricings, conversions), rate settings, and repayments. Once contacted, this group actually gets the funds for match-funded loans.
Funding Memo
A short explanation provided by a primary to secondary investors as they come into a deal. The memo describes the deal's loan outstanding profile at that point in time (e.g. number of loans, outstanding amounts, rates, repricing dates, etc) and is the basis on which the secondary will fund under its commitment. Secondary investors will not fund without a funding memo. Although these memos are usually sent out one day prior to funding, they are occasionally sent out on the same day when a bank is particularly eager to close.
GAAP
An acronym for Generally Accepted Accounting Principles. These principles are used in the accounting for and reporting of financial data as defined within the United States.
G/L
Abbreviation for an accounting General Ledger
General Ledger
The consolidataed summary book of accounts covering an entire enterprise. For a bank, the general ledger would reflect all changes in its financial position and all subsidiary ledgers (e.g. branch and department totals).
Guarantor
A legal entity that guarantees all or part of the payment of outstanding loans by the borrower. If the borrower defaults, the lender looks to the guarantor for payment.
Guidance Line
A non-binding indication - -which is usually not advised to the customer -- of the maximum amount the bank would consider lending to the customer over a specified timeframe. Specific requests for funds are assessed on their merits and can be accepted or rejected at the bank's option without prejudice or recourse by the customer.
Highly Leveraged Transactions
A highly-leverage transaction is one in which a large amount of debt is used with a small amount of equity to finance a transaction (e.g. leveraged buyouts, some forms of acquisition finance, corporate restructurings, etc). In addition to this generic definition, the Federal Reserve Bank has specific guidelines that define Highly Leveraged Transactions (HLT's) for regulatory purposes.
Holdback
See Skim
IBF
An abbreviation for Internation Banking Factility. It is a functional unit within a US bank that allows the bank to conduct business with foreign entities in legal environment similar to that of the Eurocurrency market without having to establish an offshore facility.
Index Rate
The bank's average cost of funds rate are based on actual costs over a period of time. This rate is derived by dividing the dollar cost of obtaining funds for non-match funded loans by the amount of monthly average funded assets. The rate is established by the funding desk and is the same cost of funds rate used to fund prime rate loans.