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FINANCIAL MARKET COURSES

Credit Risk Customer Management – Covenants and Credit Decisions

This first part of this course looks at covenants that are included by banks and other lenders in credit facility agreements. It describes the various types of covenant that are used, with particular focus on financial covenants, which are the most exacting type. The actions required to deal with both potential and actual breaches of covenants are also outlined.

 

The second part of the course looks at credit decisions and how they are made. The importance of credit authority levels in making such decisions is described in some detail.

  • OBJECTIVES

    On completion of this course, you will be able to:

    Identify the different types of covenant, why they are necessary, and the issues involved in monitoring them and managing any breaches

    Recognize the crucial nature of the decision to accept credit risk, and the need for such decisions to be made by the appropriate credit authority

  • COURSE OUTLINE

    Topic 1: Covenants

    What Are Covenants?

    o Examples of Covenants

    Why Are Covenants Required?

    How Many Covenants Are Required?

    Financial Covenants

    o Examples of Financial Covenants

    o Setting Financial Covenants

    Monitoring Covenants

    o Challenges

    Covenant Breaches

    o Potential Breaches

    o Actual Beaches

    Topic 2: Credit Decisions

    When Are Credit Decisions Made?

    Credit Decision Timeframe

    Who Makes Credit Decisions?

    o Individual

    o Joint

    o Collective

    o Automated Decisions Systems

    Credit Authorities

    o Credit Authority Matrix

    Facility Approvals vs. Transactional Approvals

    o Facility Approvals

    o Transactional Approvals Within Limits

    o Transactional Approvals With Exceptions

    Exceptions, Appeals, & Overrides

  • PREREQUISITE KNOWLEDGE

  • ESTIMATED COMPLETED TIME

    60 Minutes

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