Loans

When making loans to corporate clients, IMB is governed by the following principles:

 

1. Borrower’s Risk Acceptability
As part of this principle, assessment is made re the following:

• The borrower’s shareholders: their strategy towards the company; their support for the borrower (financial, technological, managerial)
• The borrower’s management team: their education, background, reputation, and attitude to IMB
• The borrower’s credit history: the history of their relations with IMB and with suppliers of equipment and raw materials
• The current financial status of the borrower: his sufficiency of funds, liquidity, and profitability
• The forecast for the borrower’s financial standing over the term of the loan: his cash flow sufficiency for servicing and repaying the loan; the amount of substantiation provided for the forecast in its different versions
• The competitive environment and development prospects: the borrower’s competitors, their strengths and weaknesses, the likelihood of price wars and the borrower’s readiness for them; the level of business confidence and incomes in the region where the borrower’s business is based, and expected trends in these fields of activity, which both serve as an indication of demand for and growth in the borrower’s services; a clear and well-defined strategy for the borrower’s development over the period of the loan, as outlined in his business plan

 

2. Loan Security
Security is essential:

• to motivate the borrower to repay the loan on time
• to comply with the regulations laid down by the Bank of Russia on the obligatory reserves required by a lending bank
• as source of funds for loan repayment should the cash flow of the borrower be insufficient for this purpose

Types of security:

• collateral on the borrower’s equipment and goods in circulation
• real estate mortgage
• chattel mortgage on equity (owned by the borrower or third parties) and other securities
• the right to write off funds from the borrower’s accounts in IMB without acceptance
• guarantees (provided by shareholders and third parties)

The interest rate on the loan varies with the type of security. The combinations of different types of security, depending on their quality, is common practice. The quality of the security relates to the liquidity of the pledged item and/or the acceptability to the bank of the guarantor’s risk. Additional security liquidity factors include the supplier’s obligation to redeem the mortgaged equipment (buy-back agreement) and the obligations of third parties to redeem pledged equity.

 

3. Working Together: IMB and the Borrower
When the borrower and IMB work closely together, a financed transaction can be monitored, and the bank can check that the borrower is fulfilling his obligations as well as keeping track of the progress of his business. A positive history of working together with the bank simplifies the procedure for the approval of new loans.

 

4. Conformity of the Loan Target to the Borrower’s Financial Requirements
When drafting the loan application, IMB seeks to offer a financing structure that in terms of its amount and repayment period best meets the client’s needs, while at the same time conforming to the Bank’s requirements with regard to accepted loan risks.