HND个人及商业信贷.docx
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HND个人及商业信贷
SAMPLEINSTRUMENTOFASSESSMENT
CASESTUDY
ThisCaseStudyshouldbeprovidedtocandidates7-10dayspriortotheassessmentdate.AcopyoftheCaseStudyshouldbeprovidedtoeachcandidateonthedateoftheassessmentalongwiththequestions.
Allquestionsmustbeanswered.
YouarethemanageroftheWestEndbranchoftheBellBankplc.
YourbranchhasbeenaskedtotrainMichaelSamuels,anewGraduateManagementTrainee.MichaelhasadegreeinArchitecturefromGlasgowUniversitybuthasdecidedthatacareerinfinancialserviceswouldbemorechallenging.
Michaelhasnowbeenwithyoufortwoweeksandhasshownakeenwillingnesstolearn.Youhaveencouragedthiswillingnesstolearnbyallowinghimtositinduringsomeofyourinterviewswithyourcustomers.YouhavesuggestedthatMichaeltakenotesduringeachinterviewandthenusethesenotestoaskyouquestionsrelatingtoeachoftheinterviews.
Michaelhassatthroughfourinterviews.Someofthematerialfactsrelatingtoeachinterviewareprovidedbelow.
Interview1
JohnandMaryMcCuskerhavebeencustomersofyourbranchfor18years.YouhavegottoknowtheMcCuskersquitewellduringyourthree-yearstayattheWestEndbranch.
Johnearns£35,000peryearfromhisjobasaQuantitySurveyorandMaryearns£21,000peryearfromherjobasaNurse.TheMcCuskershavethreechildrenaged14,12and10.ThetwoyoungestchildrenhavealwayssharedabedroombuttheMcCuskersnowfeelthetimeisrighttomovetoalargerhousetogiveallthreechildrentheirownbedroom.
Youhadagreedatanearlierinterviewtoprovideacapitalandinterestmortgagefacilityfor£120,000over20years,andtheMcCuskershavesincepurchasedanewfour-bedroomedhouseinHamiltonfor£175,000.TheirexistinghomeinLanarkhasbeensoldfor£120,000andtheMcCuskershave£40,000outstandingontheircurrentmortgageloan.
TheMcCuskershavenowidentifiedaprobleminthattheyhavearrangedtomoveintotheirnewhomeon10Maybuttheirbuyerswillnotsettleontheiroldhomeuntil4June.
MichaelSamuelsiscurioustolearnwhatprocessyouusedtodecideuponthemortgagefacilitythatyouagreedtoprovidetheMcCuskers,andtolearnwhatyouintendtodotohelptheMcCuskersovercometheirnewproblem.
Interview2
Youdiscussedprovidingatermloanof£80,000over15yearstoyourcommercialcustomers,AlbionTyresLtd.MarkandJamesThomas,afatherandson,runthecompany,whichhastradedsuccessfullyfor8years.MrThomas,Senioris52yearsofageandhissonis28yearsofage.
Thebusinessemploysfourmembersofstaff,threeofwhomaretyreandexhaustfitters,andoneofwhomdealswithofficeadministration.Oneofthefittersalsodealswithmattersrelatingtobrakeandsuspensionrepairs,apartofthebusinessthataccountsforaround15%oftheoverallturnover.
Thecompany’sexistingpremisesarenowtoosmallforthebusinessandtheyhaveidentifiednewpremisesinthecentreoftownthatwouldsuittheirpurposes.Itisexpectedthatbymovingintothecentreoftownthattheirturnoverandprofitsshouldincreasebyaround20%perannum.
Thecompanyhasproducedasubstantialandimpressivebusinessplan,includingacashflowforecastthatshowsthatthebusinessshouldbeabletocomfortablymeetthenewcommitments.
Thebusinessplanhasalsoincorporatedthelastthreeyears’accounts.
YouhaveaskedtheThomas’toallowyoutimetoexaminetheinformationintheaccountsbeforeconfirmingyourdecision.
Interview3
MonicaRobertsrequestedaloanof£8,000over5years.Shehassatisfiedyouthatshecanaffordtherepaymentsbuthasinsistedthattheloanbesecuredinreturnforareducedrateofinterestbeingchargedbyyourbank.
YouhaveagreedtoapprovetheloanandMonicahasoffered2,000SharesinCICplc(currentmarketprice450ppershare).Shehasalsooffered£2,0006%TreasuryStock2011(currentmarketprice£102).
Interview4
Youarrangedanappointmentwithyourbusinesscustomer,JohnThomson,todiscusssomeconcernsthatyouhavebeenhavingwiththeoperationsofhisbusinessaccount.YouhavenowmadesomesuggestionstoMrThomsontohelphimtoregularisehisfinancialposition.
MichaelSamuelsissomewhatconfusedastohowyouwereabletoidentifythattherewereproblemswiththeoperationsofthebusinessinthefirstplace.
QUESTIONS
Allquestionsmustbeattempted.
1.FollowingtheinterviewwiththeMcCuskers,Michaelhasaskedyoutoexplaintohimtheproceduresthatalenderwouldusetoensurethatthedecisionmadeissoundandjustifiable.
SummarisethePrinciplesofLending,identifyingthetypeofinformationthatyouwouldhaveobtainedfromtheMcCuskersduringtheinterviewforthemortgageapplication.
2.MichaeliscurioustolearnhowyouintendtodealwiththeMcCuskers’newproblem:
a.IdentifythemostappropriateloanfacilitythatwouldhelptheMcCuskersovercometheircurrentpredicament.
b.Explainthemainfeaturesofthisloanfacility,and
c.CalculatethelevelofborrowingrequiredbytheMcCuskers.
3.YouhavespenttimewithMichaelshowinghimhowtocalculatevariousratiosfromtheaccountsthatAlbionTyreshaveprovided.Thefollowingratioshavenowbeencalculated:
RatioYear2001Year2003Year2004
CurrentRatio2.4:
12.6:
12.8:
1
LiquidRatio0.5:
10.8:
11:
1
GrossProfit%56%58%57%
NetProfit%23%21%20%
ROCE%42%45%56%
DebtorsRatio12days10days10days
CreditorsRatio45days55days55days
StockTurnover55days65days68days
CapitalGearing12%10%15%
ExplaintoMichaelhoweachratiowouldhavebeencalculatedandhowthesefiguresmightbeinterpretedfromalendingviewpoint.
4.AlbionTyresareplanningtomovetonewpremises.Youhaveidentifiedthatoneoftheiremployees,whospecialisesinbrakesandsuspensions,isaparticularlyimportantsourceofthecompany’ssalesandprofits.
Michaelisconcernedthatthebusinessmightsuffertemporarilyifthatemployeeweretofallill.
a.Identifythemostrelevanttypeofancillarybusinessinsuranceproductthatwouldprotectthecompanyagainstlossesincurredduetotheemployee’sillness.
b.Summarisethemainfeaturesofthisproduct,clearlyexplainingwhyyouconsiderittobesuitable.
5.MichaeliscurioustolearnhowyouintendtogoabouttakingsecurityoverthesharesandgovernmentsecuritiesofferedbyMonicaRoberts.Summarisethemethodsusedtoensurethatsecurityifeffectiveovertheseassets.
6.MichaelwasquiteimpressedthatyouwereabletoidentifyfromJohnThomson’sbusinessaccountsthathisbusinesswas‘gettingintotrouble’.
Listandexplainfourofthewarningsignsthatalendercanidentifyfromthecompanyaccountsofabusiness.
Assessmenttask
1
Outcome(s)covered
1,2,3,4
Suggestedsolutionandmakinganassessmentdecision
SuggestedSolutionstoSampleAssessment
1.Thecandidateshouldidentifytheprinciplesoflending.PreferablythecandidatewilluseoneoftherecognisedmnemonicssuchasPARSERS,CAMPARIorCCCPARTStoidentifytheprinciples.Creditshouldbegiventothestudentregardlessofthemnemonicused.ForthepurposeofthissolutionPARSERSisbeingused.
Theprinciplesthatshouldbediscussedare:
Person-Character,capabilityandcapital
AmountandPurpose
Repayment–Sourceandtiming
Security
Expediency
Remuneration
Services.
Thetypesofinformationthatwouldbeobtainedundereachheadinginclude:
Person:
∙Ageanddateofbirth(ifnotalreadyknownfromfiles)
∙Children’snamesandages
∙Employmentdetails(althoughthismaybelistedonfile,itisimportanttoconfirmthattherehavebeennochangessincethelastinterview)
∙Salary(althoughindependentconfirmationwouldberequired)
∙Expenditure
∙Assetsandliabilities
∙Previouspaymenthistory.
AmountandPurpose:
∙Reasonforloanrequest
∙Amountofloanrequired
∙Confirmationthatpurposeisacceptable(surveyrequiredtoensurethatvalueandconditionofthepropertyissuitable)
∙Termofborrowing
∙Affordabilityofborrowing.
Repayment:
∙Confirmationofhowoftensalaryispaid(thereisnowscopetosetuprepaymentonatwo-weeklybasistoreduceoverallcostofborrowing)
∙Confirmationofreceiptofsalariestobank
∙Confirmationfromemployersthatemploymentispermanent.
Security:
∙Standardsecurityovernewhomerequired
∙Confirmationthatthepropertycanbetakenassecurity
∙Valueofpropertyshouldbeconfirmedonbricksandmortarandreinstatementbasis
∙Confirmationthatlifecoverhasbeenarranged,andassignifrequired.
Expendiency:
∙Shouldbeexplainedifidentifiedasoneoftheprinciples
∙However,itdoesnotreallyapplyinthissituation.
Remuneration:
∙Confirmationhowfees,suchassolicitorsfees,valuer’sfees,lender’ssetuporarrangementfees,stampduty,etcaretobepaid
∙Interestratetobedeterminedbytypeoffacilitybeingtakenbyborrower
∙Aretheylookingforvariable,fixed,cappedrateetc.
Services:
∙Otherproductsthatmightberelevantshouldbeexplainedeg:
oPaymentprotectioninsurance
oBuildingsandcontentsinsurance
oLifeassurance.
2.a.TheMcCuskerswillrequireaclosedendedbridgingloan
b.Abridgingloanisrequiredtoprovideshort-term,largecapitalloanstoassistbuyersofproperty,whohavenotyetreceivedtheproceedsfromthesaleofanotherproperty.
Wherethebuyerisbuyingandsellingapropertyatthesametime,itmaybethatthedateofentrytothenewhousewilldifferfromthedateofsaleoftheexistinghouse.
Sincemostbuyersneedatleastsomeoftheproceedsfromthesaleoftheirexistinghousetofinancethepurchaseprice