Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
12 Cards in this Set
- Front
- Back
|
Impact of financial crisis on bank lending |
Banks now have to hold more capital proportionate to their level of lending.
Therefore bank lending is now more expensive more covenants harder to get shorter periods offered at higher credit spreads |
|
|
Relationship vs. transactional banking (Corporate perspective) |
Relationhip - one or small number banks provide most services. Open and full communication of cororate intentions, position and requirements. More likely to lend in tough times Transactional - Many banks for different transactions. Selection is 'deal driven' and most important selection criteria is cost. Very little other inflow |
|
|
Relationship vs. Transactional (Bank View) |
Relationship - concerned withoverall return. May take hits on certain services in order to tender for others Transactional - Return per deal or product required |
|
|
Considerations for choosing a relationship bank |
Large or local for foreign need Balancing good competition and too many banks When borrowing, giving sufficient ancillary business, lending alone is unlikely What is banks motivation |
|
|
Criteria for selecting partner banks |
-Amount of fin support offered ( committed facilities, business development) -Capital adequacy and credit rating -Customer service and operational efficiency -Reputation and management quality -Sophistication and portfolio -Territorial spread -Price competitiveness -Ability to understand corporate business and operations -Ability to innovate |
|
|
Monitoring partner banks |
Follow the news Review bank strategy with seior bank manager Ensure ratings are monitored Service Quality Ensure expectations are communicated and met Levels of business with each bank Monitor bank charges and tariffs New products and services |
|
|
Basel III |
Read up more on rewuirements for capital adeqaucy and liquidity coverage ratios |
|
|
Impact of basel III on treasury |
Banks offer less products as result of liquidity coverage Increased costs for undrawn lines and guaranteess Less credut for borrwers with low credit rating Non-operational cash has higher collateral costs than operating cash >31 days is favourable > 1 year very favourable |
|
|
Example 3 for this chapter |
look into it |
|
|
Objective of EMIR |
Reduce risk to financial systems from vast web of OTC derivative transactions and contingent large credit exposures |
|
|
Requirements of EMIR |
Central clearing and margaining of OTC derivatives Report all derivatives to trade repository (can be outsourced) Risk mitigation for all non-cleared derivs including collatera exchange, confirmations and recon procedures Confirming all trades within 2 business days |
|
|
Implications of financial services (banking reform) bill |
UK banks must seoarate retail and IB. Ring fence individual and SME deposits Large corporate can choose who they wish to continue banking with |
