Credit & Lending Assignment
Assignment Cover Sheet
Module Name: CREDIT & LENDING
Word Count: 2701
Number of Pages: 15
Statement of Authenticity
To be completed by all students
Unless otherwise stated, this assignment and its appendices are all my own work.
Name of Candidate: LOVY JEAN
Student Number:
Signed:
Date: Dec 8, 2013
QUESTION 1:
In general terms, banking involves the business activity of accepting customer’s deposits at a small cost to the bank and then lending those funds to customers at a cost high enough for the bank to earn a profit. The business of lending is very risky, therefore lenders are encouraged to apply the principles of good lending or canons of lending. Though the canons of lending do not prevent the risks associated with lending it does mitigate risks involved.
To address the credit request of the Shepherds, the CAMPARI lending principles will be used since they have proven to credit set of guidelines used for making credit decisions.
Character
The Shepherds currently has no relationship with the bank, they are customers of another bank.
The pair is married and wishes to form a partnership to purchase a hotel.
The couple has no relevant experience in management or the hotel business.
Mrs. Shepherd has some experience in the restaurant trade. Adam is a freelance illustrator and has some experience in sales.
Good long-standing customers of their bank in the south of England.
Ability
Financial growth experienced under the existing sole trader owner
No evidence to suggest the Shepherds are experienced enough to run a hotel.
New venture will not be priority to Mr. Shepherd (Still wants to freelance)
Margin
Margin will reflect the risks involved.
The customer’s limited knowledge and experience shapes this request as very risky one.
Purpose
The purpose facility is to finance the purchase of the Highland Country House Hotel in Scotland.
Amount
Currently a
Module Name: CREDIT & LENDING
Word Count: 2701
Number of Pages: 15
Statement of Authenticity
To be completed by all students
Unless otherwise stated, this assignment and its appendices are all my own work.
Name of Candidate: LOVY JEAN
Student Number:
Signed:
Date: Dec 8, 2013
QUESTION 1:
In general terms, banking involves the business activity of accepting customer’s deposits at a small cost to the bank and then lending those funds to customers at a cost high enough for the bank to earn a profit. The business of lending is very risky, therefore lenders are encouraged to apply the principles of good lending or canons of lending. Though the canons of lending do not prevent the risks associated with lending it does mitigate risks involved.
To address the credit request of the Shepherds, the CAMPARI lending principles will be used since they have proven to credit set of guidelines used for making credit decisions.
Character
The Shepherds currently has no relationship with the bank, they are customers of another bank.
The pair is married and wishes to form a partnership to purchase a hotel.
The couple has no relevant experience in management or the hotel business.
Mrs. Shepherd has some experience in the restaurant trade. Adam is a freelance illustrator and has some experience in sales.
Good long-standing customers of their bank in the south of England.
Ability
Financial growth experienced under the existing sole trader owner
No evidence to suggest the Shepherds are experienced enough to run a hotel.
New venture will not be priority to Mr. Shepherd (Still wants to freelance)
Margin
Margin will reflect the risks involved.
The customer’s limited knowledge and experience shapes this request as very risky one.
Purpose
The purpose facility is to finance the purchase of the Highland Country House Hotel in Scotland.
Amount
Currently a
References: Madura, J. (2009), “Financial Markets & Institutions, Abridged 8th Ed.” South-Western, a part of Cengage Learning BusinessDictionary Business Dictionary. Documentary Credit . (online). Business Dictionary.com. Available at: http://www.businessdictionary.com/definition/documentary-credit.html. Access Date: December 8, 2013 Business Dictionary Demonstrating Value. Financial Ratio Analysis. (online). DemonstratingValue.com. Available at: http://www.demonstratingvalue.org/resources/financial-ratio-analysis. Access Date: December 8, 2013 Haidar, M HSBC. Banking Services – Forward Contract Booking.(online). HSBC. Available at: http://www.commercial.hsbc.com.hk/1/2/commercial/online-services/faq/banking-services/forward-contract-booking. Access Date: December 8, 2013 Investopedia Access Date: December 6, 2013 Toohey, Mark