types of fs 2

8/3/2019 types of fs 2

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Similar to consortium financing

The process of involving several differentlenders in providing various portions of a

loan.

5/4/20121

Loan syndication


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5/4/20122

mainly used in extremely large loan situations.

syndication allows any one lender to provide a large loan

while maintaining a more prudent and manageable credit

exposure .

Under loan syndication , several banks (or financial

institutions) finance a single borrower with common

appraisal, common documentation, joint supervision and

follow-up exercises, these banks have a common agreement

between them, the process is some what similar to loansyndication.


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5/4/20123

Loan arranged by a banker

Called lead manager

Borrower large customer or government.

Other banks who are willing to lend will join They form a syndicate


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Custodial services

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A brokerage or other financial institution that holds

and manages a client's securities or other assets on

his/her behalf.

This reduces the riskof the client losing his/her assets

or having them stolen.

They are also available to the brokerage to sell at the

client's demand.

Like a bank, a custodian provides an investor a placeto store assets with little risk.

Brokerages normally require a fee for custodial

services. See also: Safekeeping.
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Corporate advisory services

5/4/20125

A range of consultancy services provided by CertifiedPublic Accountants (CPA) and other financial advisors

to businesses and high net worth individuals who

require specialized advice on capital formation, cash

flow and wealthmanagement. Advisoryclientspayfeesbased on services provided or as a percent ofassets

under management.
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5/4/20126

Corporate advisory firms play a crucial role in businessoperations.

The literal meaning of corporate advisory services in

India is the activity of advising organizations, which

include corporations, institutions and Government

bodies about the transactions that can change the

ownership of a company or business such as mergers

and acquisitions.


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securitization

5/4/20127

Securitization broadly implies every such process,which converts a financial relation into a transaction.

Converts a ill liquid, non negotiable and high value

financial assets into securities of small value which are

tradable and transferable.

History of evolution of finance, and corporate law

indicate where relations are converted into

transactions.

This earliest instance of securitisation was

instrumental in the growth of the corporate form of

business and separation of ownership and

management of organizations is one of the greatestcommercial inventions o this 19th centur .


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5/4/20128

Securitization is defined as the process whereby loans,receivables and other financial assets are pooled together,

with their cash flows or economic values redirected to

support payments on related securities.

These securities, some of which are referred to as asset-backed securities are issued and sold to investors

principally, institutions in the public and private markets by

or on behalf of issuers. The issuers use securitization to

finance their business activities. The financial assets thatsupport payments on asset-backed securities include

residential and commercial mortgage loans, as well as a

wide variety of non mortgage assets such as trade

receivables, credit card balances, consumer loans, lease

receivables, automobile loans, and other consumer and


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Reverse mortgage

5/4/20129

Definition: A special type of home equity loan forpersons 62 and older. Reverse mortgages allow owners

to convert some of the equity in their homes to cash.

The loan does not usually have to be repaid during the

homeowner's lifetime. Loan advances are not taxableand do not affect the homeowner's Social Security or

Medicare benefits.


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Meaning cont

5/4/201210

A type of mortgage in which a homeowner can borrow moneyagainst the value of his or her home.

No repayment of the mortgage (principal or interest) isrequired until the borrower dies or the home is sold.

After accounting for the initial mortgage amount, the rate at

which interest accrues, the length of the loan and rate of homeprice appreciation, the transaction is structured so that the loanamount will not exceed the value of the home over the life of theloan.Often, the lender will require that there can be no other liens

against the home. Any existing liens must be paid off with the proceeds of the

reverse mortgage.


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types of fs 2

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