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Loan Sales - Coggle Diagram
Loan Sales
Whys Bank And other FIs sell loans
credit risk management
offload exposure to single borrowers
reserve requirements
if sold without recourse, removed from balance sheet
Fee Income
Boosts reported earnings
Liquidity RIsk
Trading long-term assets for short-term
Capital Adequcy
Meet capital requirements by reducing assets
Bank Loan Sales Market
Types of Loan Sales Contracts
participation in a loan
limited contractual control
dual risk exposure and monitoring cost
assignment
currently form bulk of the market
all rights transferred on sale of loan
normally associated with uniform commercial code filling
complexity associated with accrued interest
Factors affecting loan sales growth