Administration of existing exposures Flashcards
Why is it critical for Marketing/relationship management officers to maintain direct contact
with customers through periodic visits after extending credit?
A. It will help the bank get more business from the customer.
B. It will ensure that the customer believe that we care.
C. It provides relevant, up-to-date and reliable informed on-going management of exposure quality and overall business condition of the obligor and relationship with the bank.
D. None of the above.
CCCCC
It provides relevant, up-to-date and reliable informed on-going management
of exposure quality and overall business condition of the obligor and
relationship with the bank.
Where is this meeting most suitable to take place?
A. Ikoyi Club 1938.
B. Place of worship of customer.
C. Private residence of customer.
D. Customer’s business location as well as bank premises.
E. Any place will do.
D.
Customer’s business location as well as bank premises.
What determines the frequency of credit calls?
A. Risky obligor/large exposures.
B. Less risky obligor/smaller exposure.
C. Pressure of work (or lack of) on Relationship Manager.
D. A & B.
E. All of the above.
D.
A & B.
Information gathered from credit calls are properly documented and circulated via:
A. Text message to Group Head and Credit Risk Management.
B. Call memo to business head and CRM.
C. Verbal report to business head and CRM.
B. Call memo to business head and CRM.
Why is Bank and trade check an important component of the credit process?
A. To fulfill know your customer requirements.
B. To satisfy customer service/operations units.
C. It serves as an assessment of obligor and confirmation that business remains
a going concern.
D. All of the above.
C.
It serves as an assessment of obligor and confirmation that business remains
a going concern.
The ongoing administration of the quality and performance of loans depends on:
A. Periodic analysis of up-to-date financial information.
B. The character, ability and willingness of customer to meet its obligations to
the bank.
C. All of the above.
D. None of the above.
A.
Periodic analysis of up-to-date financial information.
- What is the objective of collateral inspection?
A. To prevent against the incidence of double pledging by customer.
B. To ensure that there are no shortfalls and gaps.
C. To confirm the existence and adequacy of all collateral held as security.
D. A & B exclusively.
C.
To confirm the existence and adequacy of all collateral held as security.
Under the CRG RM must conduct and document site visit prior to disbursement of funds under: A. Overdraft facility. B. Revolving credit facility. C. Import and export finance. D. Term loans. E. All of the above.
D.
Term loans.
Depending on the nature of collateral, any collateral held must be revalued periodically.
Why?
A. To make sure that collateral has not gone bad.
B. To ensure the safety of pledged security.
C. To confirm the continuing appropriateness of and adequacy of the forced sale value of
collateral on the open market to cover the bank’s exposure.
D. A & B.
E. All of the above.
C.
To confirm the continuing appropriateness of and adequacy of the forced sale value of
collateral on the open market to cover the bank’s exposure.
Where obligations are secured by marketable securities which are prone to price fluctuation
e.g. shares, what can you do to ensure that your exposure to the customer is always covered
no matter what happens?
A. Make sure that you are in constant contact with the stock brokers.
B. Constantly monitor the daily stock exchange position.
C. Establish a predetermined “stop loss or “sell point” under clear advice to the obligor.
D. Sell at the slightest hint of price movement.
C.
Establish a predetermined “stop loss or “sell point” under clear advice to the obligor.
Collateral valuation is usually conducted by
A. RM and CRM.
B. RM, CRM and Professional appraisers.
C. RM, CRM and appropriate local govt. and law enforcement agencies.
D. All of the above.
B.
RM, CRM and Professional appraisers.
All legal documentation in respect of approved credit exposure are kept in:
A. RM’s secured drawers.
B. Filing cabinet in secretary’s custody.
C. Fireproof safe cabinet in GH’s office.
D. Bank vault or a location of equivalent security and safety.
E. All of the above.
D.
Bank vault or a location of equivalent security and safety.
What is the frequency of the conduct of physical verification of all credit documentation A. Monthly B. Quarterly C. Semi-annually D. Annually E. As the need arises.
D.
Annually
How often does CRM and relevant approval authority review all outstanding credit transactions and commitments? A. Monthly B. Quarterly C. Semi-annually D. Annually E. As the need arises
D.
Annually
Under what circumstances will collateral be released to a customer?
A. Upon confirmation of full repayment of facility
B. Upon liquidation of facility in accordance with agreed terms and condition.
C. At the request of the customer
D. As the need arises
B.
Upon liquidation of facility in accordance with agreed terms and condition.
How often must obligor and facility exposure quality and performance grades be reviewed? A. As the need arises B. Quarterly C. Annually D. On a case by case basis
C.
Annually
What is the primary information source for decision-making on credits and customer relationships? A. Credit files B. Direct customer contacts C. Bank & credit checks D. Newspapers and business journals E. All of the above
A.
Credit files
Credit files must contain at a minimum:
A. Copies of international passport of obligor, driver’s licence
B. Passport photograph and utility bill
C. Lease agreements between him and his tenants
D. Memoranda and correspondence with customer
E. All of the above
D.
Memoranda and correspondence with customer
How often must credit files be reviewed? A. If the need arises B. Periodically C. Monthly D. Quarterly E. All of the above
B.
Periodically
How do you treat information of an unfavourable nature in the credit file e.g. a significant
problem in the relationship?
A. Hide the information away from prying eyes and busy bodies
B. Deliberately remove the information from the file so as not to implicate
yourself.
C. Permanently retain and mark the information
D. File the information away in your personal “just in case” file folder.
C.
Permanently retain and mark the information
How many components are there to each customer credit file? A. 5 B. 4 C. 3 D. 2 E. 1
D.
2
On what basis does the bank extend credit facilities?
A. Sometimes based on customer’s ability to negotiate a good deal
B. Based on forces of demand and supply in the market place
C. Based sometimes on verbal commitments made to customer by executive management of the bank.
D. On the basis of legal commitments notified in writing to a customer once the terms and conditions contained therein have been satisfied.
E. All of the above
D.
On the basis of legal commitments notified in writing to a customer once the
terms and conditions contained therein have been satisfied.
Under what circumstances will an unadvised facility be appropriate
A. To keep client’s account balance within the scope of cover provided by its collateral.
B. To keep borrower’s account within an approved credit limit.
C. To avoid penalty interest rates on excesses over previously approved facilities.
D. All of the above
E. None of the above pg 136
D.
All of the above
Which one of the under listed will not be suitably structured as a term loan? Pg42 A. Equipment finance B. New Technology capital loan C. Operating expenses pg42 D. Asset replacement E. Working capital loan
C. Operating expenses pg42
On repayment, a customer may re-borrow under the same condition provided that:
A. The tenor of revolving credit does not exceed 3 years
B. Customer’s business/trading cycle remains defined
C. There is no material change to his financial position pg42
D. There must be management approval
E. All of the above
C. There is no material change to his financial position pg42
In the event that a temporary overdraft accommodation remains outstanding for a period longer term 30 days, what prudent step should be taken? Pg 38
A. Account officer to intensify effort to recover
B. RM to seek approval for renewal of facility
C. Bank to consider referring the matter to EFCC
D. Facility shall be classified as a past due loan
E. All of the above
D. Facility shall be classified as a past due loan
Customers request for withdrawal against uncleared effects or drafts will not be approved for one of the following reasons:
A. Drawings under DAUE/DAUD against company’s own cheque
B. Drawings in excess of the approved DAUE/DAUD
C. Cheques drawn on persons or organizations rated as “low risk” by the bank.
D. A and B exclusively pg43
E. All of the above
D. A and B exclusively pg43
How many parties are there to a typical transaction involving the issuance of a bond by the bank? A. 2 B. 3 C. 4 D. 5 E. 6
D. 5
what instance(s) will a bond /guarantee be issued on a clean basis to a client?
A. Client is a major government contractor
B. Customer has never defaulted on prior obligation to the bank
C. Customer is a highly rated multinational company
D. Bond includes a clause to make it (bond) effective only upon receipt of equivalent cash cover from the beneficiary. Pg43
E. All of the above
C. Customer is a highly rated multinational company
Which of the following statement is true concerning the issuance of bonds/guarantees?
A. The maturity of the underlying contract must match the tenor of the bond/guarantee
B. The maturity of the underlying contract must be less than the tenor of the bond/guarantee.
C. The maturity of underlying contract must exceed the tenor of the bond/guarantee. Pg44
D. None of the above
C. The maturity of underlying contract must exceed the tenor of the bond/guarantee. Pg44
