Non-performing Loans and Methods of Problem Loan Resolution         

By the end of this course you will be able to:

.Define non-performing loans and the causes.

.Identify the indicators of non-performing loans.

.Explain the banking treatment of non-performing loans.

.Explain the banking treatment of non-performing investment projects.

.Monitor rescheduled non-performing loans.

.Manage non-performing loans.

.Explain the principles of borrower credit ratings and provisioning.

.Identify the lessons learned from classified/non-performing loans.

.Describe the legal aspects of working with non-performing loans.

Course Outline:

.1- Introduction to Non-performing loans

.1-1 Introduction to the elements of credit

.1-1-1 Element of uncertainty

.1-1-2 Element of confidence

.1-1-3 Element of time

.1-2 Definition of non-performing loans

.1-2-1 Non-performing projects

.1-2-2 Non-performing borrowers

.1-3 Causes of non-performing loans

.1-3-1 Inappropriate financing tranches and/or credit facilities

.1-3-2 Inadequate credit analysis

.1-3-3 Defective loan monitoring

.1-3-4 Disbursement problems

.1-4 Lender causes

.1-5 Borrower causes

.1-6 Environmental causes

.2- The Indicators of the Non-performing Loan

.2-1 The four stages of the non-performing loan

.2-1-1 Short-term liquidity problem

.2-1-2 Long-term liquidity problem

.2-1-3 Deteriorating financial structure

.2-1-4 Complete failure

.2-2 The indicators of non-performing loans in the financial statements

.2-2-1 Income statement

.2-2-2 Balance sheet

.2-2-3 Financial ratios and indicators

.2-3 Indicators of problem loans generated internally by clients’ accounts in banks

.2-3-1 Borrower account movements

.2-3-2 Analysis of the borrower’s goods and / or services

.2-3-3 Analysis of the borrower’s guarantees

.2-3-4 Analysis of unforeseen guarantees related to clients

.2-4 Problem loan indicators generated from client information and field visits

.2-5 The usage of the Eltman predictor

.3- The Banking Treatment of Non-performing Loans

.3-1 Strategies for dealing with non-performing loans

.3-1-1 Liquidation

.3-1-2 Settlement

.3-2 Various scenarios for modifying the status of borrowers in default

.3-2-1 Rescheduling the debt

.3-2-2 Financial injection

.3-2-3 Equity participation

.3-2-4 Settlement through reducing bank profitability

.4- The Banking Treatment of Non-Performing Investment Projects

.4-1 The treatment of failing projects due to the lack of a sound feasibility study

.4-1-1 The cash injection method

.4-1-2 Transitioning part of the frozen loans to equity participation

.4-1-3

.5- Monitoring Rescheduled Non-performing Loans

.5-1 The importance of grading and sequencing when rescheduling non-performing loans

.5-2 Rescheduling non-performing loan repayments

.5-3 On-site monitoring

.6- Managing Non-Performing Loans

.6-1 Introduction to the management of non-performing loans

.6-2 The functions and responsibilities of problem loan management

.6-3 Procedures for transferring the borrower from performing loans to non performing loans

.7- The Principles of Borrower Credit Ratings and Provisioning

.7-1 Management of credit risk and borrower credit risk ratings

.7-1-1 Credit risk management

.7-1-2 The explanation of the Obligor Risk Rate (ORR)

.7-1-3 Credit ratings and loan loss provisions

.7-1-4 The accounting treatment of irregular loan repayments

.7-1-5 The rules for determining the fair market value of pledged mortgage collateral

.7-1-6 The general rules for provisioning

.7-2 Management of credit risk and the classification of consumer and residential mortgage loans

.7-2-1 Introduction

.7-2-2 Credit risk management

.7-2-3 Credit ratings, provisioning and the status of real estate

.7-2-4 The accounting treatment of irregular returns and the general rules for provisioning

.7-3 Credit risk management and the classification of small loans

.7-3-1 Introduction

.7-3-2 Credit risk management

.7-3-3 Credit ratings and provisioning

.7-3-4 The accounting treatment of loan repayments

.7-3-5 General rules for provisioning

Target Audience:

.Course is intended for employees in project finance, lending and credit administration in banks and other financial institutions and internal audit staff.

Prerequisites:

This course entitles you to attend:

Upon successful completion of this course, participants will obtain:

.Training attendance certificate