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Credit Documentation & Review (Sources of Credit) (Not Publicly…
Credit Documentation & Review (Sources of Credit)
Not Publicly Available Info.
Minutes of Director's Meeting :star:
Summary of records of what is said and decided at a management meeting
What do you look out for?
1) Review information regarding the future of the business
2) Ensure that the board of directors have agreed to the borrowing, and thereby allows the bank to satisfy itself of the legality of the borrowing
Banker's Opinion :star:
aka
Status Report
What do you look out for?
1) Date account is opened
2) Info. about the mgmt
3) Types of facilities granted and used
Banks will usually place a disclaimer clause on their opinion
Information is given without responsibility on behalf of the bank or their officials
Bankers’ opinion / Interpretation
‘Undoubted’ Favourable
‘…which is good for your figure of…’ Favourable
‘…your figure is larger than normally seen but should prove good…’ Cautionary
‘…new customer to this bank but should prove good for your figure of…’ Cautionary
‘…resources fully committed…’ Unfavourable
‘…capital fully employed…’ Unfavourable
‘…cannot speak for your figure…’ Unfavourable
Interviewing the Client
:star:
When bank lends money, the client will be interviewed
Notes should be taken during the interview and made available in the credit files
Notes serve as aide-memoire, for the bank, when considering other information and any new borrowing application
What do you look out for?
1) Information gathering
2) Testing the information that has been gathered
3) Building banking r/s
Interview Pitfalls :forbidden:
Communication problems :red_cross:
1) Communicator may have difficulty putting ideas into a suitable form of words
2) Receiver of the message is too quick to jump to conclusions or become defensive
3) Unsuitable environment acts as an impediment to good communication
4) Misinterpretation of feedback from the receiver of the message may arise
Perception problems :red_cross:
Stereotyping :explode:
Involves grouping people with similar characteristics and allocating traits to them, based upon this grouping
Halo effect :explode:
Occurs when we perceive people in terms of the concept of good and bad
All good qualities are possessed by the former and all bad qualities by the latter
Projection :explode:
Tendency for people to project their own feelings, motives or characteristics to their perception of other people
Perceptual defence :explode:
Occurs when we select information which is supportive of our point of view and choose not to acknowledge contrary information
Visiting Client's Premises :star:
What do you look out for?
1) Goodwill visit
Aka ‘call and care’ visit
Relates to establishing a rapport and building a relationship with existing customers.
2) Confirmation of the original interview
Provides an update on the position of the business
To see at first-hand what the customer’s product or service is
The borrower is doing what he says he is doing
3) Assessing the level of security and comfort available in the business
4) Prospect visits
With new or potential customers, it provides an opportunity to meet the people involved