BUS307 Commercial Banking Essay Assignment
Order ID 53563633773 Type Essay Writer Level Masters Style APA Sources/References 4 Language English Pages 5-10 pages
Banks around the world are suspending loan repayments as coronavirus hits borrowers
The Monetary Authority of Singapore said individuals can apply to defer principal and interest repayment of residential property loans.
With a global recession on the horizon as the coronavirus pandemic continues to ravage economies around the world, banks in various countries have scrambled to offer relief for those whose lives, jobs and businesses have been upended in the crisis.
Homeowners with hefty mortgage repayments and borrowers who have taken large sums of bank loans to sustain their businesses risk falling into default as world economies take a sharp dive amid nation-wide lockdowns and a halt in most international travel.
Pre-empting a potential tide of defaults from affected borrowers, Singapore’s central bank on Tuesday (March 31) offered loan relief for individuals and companies.
Individuals can apply to their banks to defer both principal and interest repayment of residential property loans until Dec 31, the Monetary Authority of Singapore said. Small and medium-sized firms can defer principal payments on secured term loans also up to the end of the year.
Singapore isn’t the only country offering generous mortgage deferrals amid the coronavirus crisis. Here are some other nations whose banks have sprung into action
Malaysia’s central bank last week said banking customers would be allowed to delay repaying their existing loans for six months from Wednesday.
The moratorium – part of Bank Negara’s measures to help borrowers under strain due to the coronavirus outbreak – will automatically apply to all ringgit-denominated loans and financing not in arrears of more than 90 days, The Star reported. It will not apply to credit card balances. The central bank said banks should allow customers to convert their outstanding credit card balances into term loans of not more than three years.
Following the announcement, several Malaysian banks said they would not be compounding interest for their customers during the six-month moratorium period. RHB Banking Group, Public Bank Bhd, Malayan Banking Bhd (Maybank), CIMB Bank Bhd, OCBC Bank (M) Bhd, HSBC Malaysia, AmBank Group, Affin Bank Bhd, United Overseas Bank (Malaysia) Bhd and Citi Malaysia were among those banks offering non-compounded interest for retail customers and small and medium-sized enterprises.
Banks in Thailand announced a coronavirus debt-relief package in early March, offering companies a year-long grace period to repay their loans.
The package came in tandem with state relief measures, and the grace period on loan repayments applied to companies in the tourism sector, exporters, importers and retailers, the Nikkei Asian Review reported.
Several banks in Britain have offered repayment holidays on mortgages and loans in an effort to stem a potential tide of defaults from borrowers affected by the coronavirus crisis. Among those lenders were the Royal Bank of Scotland, Lloyds and TSB, the Guardian reported early last month.
RBS Group, in which the British government has a majority stake, said it would grant a three-month break on mortgage and loan repayments for customers under strain due to the virus situation. It also offered to temporarily raise affected customers’ credit card limits and scrap fees on credit card cash advances, among other measures.
Italy announced in early March it would suspend all mortgage repayments across the nation, as the country went under lockdown to contain the coronavirus outbreak.
Italy’s banking lobby group ABI said lenders would offer debt holidays to small firms and families, BBC reported. It’s not the first time debt payments were halted in Italy. A similar relief measure was granted to some small businesses and households during the financial crisis.
Italian banks own the biggest pile of non-performing loans – about 142 billion euros – among European Union countries, according to a Bloomberg report. The Italian banking association in February asked for a one-year suspension of rules that force them to identify past-due loans as being in “default” to free up more money for lending.
As the coronavirus crisis worsens in the United States, the country’s two mortgage giants Fannie Mae and Freddie Mac have instructed lenders to grant their customers more flexibility in either lowering or halting home loan repayments for up to 12 months.
Their action effectively grants relief to half of all American home loans, according to a Fortune.com report last week. Other mortgage lenders across the country are expected to follow suit in the coming weeks and months.
The Trump administration was also mulling a nation-wide plan to let homeowners affected by the virus situation delay their mortgage repayments, Bloomberg reported earlier last month. But the government would have to decide on a mechanism for borrowers to catch up with their postponed payments, as well as to determine how to advance money to mortgage servicers so that investors in mortgage-backed securities get their guaranteed payments.
Canada’s six biggest banks last month said they would allow homeowners to delay their mortgage repayments for up to six months, as part of a coronavirus-relief plan.
The lenders – Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada and Toronto-Dominion Bank – also offered other debt relief measures including credit card repayment deferrals and extensions on mortgages’ amortisation periods, the Financial Post reported. Borrowers were advised to reach out to their banks to apply for the deferrals.
Borrowers in good standing who had been affected by the pandemic could apply at any time, with deferrals available for an indefinite period, Bloomberg reported. Under the plan, payments are skipped for a period of time, and accrued interest accrued is added to the mortgage’s outstanding balance. The additional interest is incorporated into future monthly payments when they resume, or upon renewal at the end of the mortgage’s term.
base on the article above,
Question a) what impact would these strategies have on the risks facing the bank. given that banks are suspending loan repayment. be specific.
question b) how do the bank effectively ensure that they monitor and screen the borrowers to prevent moral hazard and adverse selection.
question c) using capital, character, collateral, capital and condition, explain characteristics that a credit card is unique. given that selected countries credit card are attracting special treatment.
Quality of Response No Response Poor/Unsatisfactory Satisfactory Good Excellent Content (worth a maximum of 50% of the total points) Zero points: Student failed to submit the final paper. 20 points out of 50: The essay illustrates poor understanding of the relevant material by failing to address or incorrectly addressing the relevant content; failing to identify or inaccurately explaining/defining key concepts/ideas; ignoring or incorrectly explaining key points/claims and the reasoning behind them; and/or incorrectly or inappropriately using terminology; and elements of the response are lacking. 30 points out of 50: The essay illustrates a rudimentary understanding of the relevant material by mentioning but not full explaining the relevant content; identifying some of the key concepts/ideas though failing to fully or accurately explain many of them; using terminology, though sometimes inaccurately or inappropriately; and/or incorporating some key claims/points but failing to explain the reasoning behind them or doing so inaccurately. Elements of the required response may also be lacking. 40 points out of 50: The essay illustrates solid understanding of the relevant material by correctly addressing most of the relevant content; identifying and explaining most of the key concepts/ideas; using correct terminology; explaining the reasoning behind most of the key points/claims; and/or where necessary or useful, substantiating some points with accurate examples. The answer is complete. 50 points: The essay illustrates exemplary understanding of the relevant material by thoroughly and correctly addressing the relevant content; identifying and explaining all of the key concepts/ideas; using correct terminology explaining the reasoning behind key points/claims and substantiating, as necessary/useful, points with several accurate and illuminating examples. No aspects of the required answer are missing. Use of Sources (worth a maximum of 20% of the total points). Zero points: Student failed to include citations and/or references. Or the student failed to submit a final paper. 5 out 20 points: Sources are seldom cited to support statements and/or format of citations are not recognizable as APA 6th Edition format. There are major errors in the formation of the references and citations. And/or there is a major reliance on highly questionable. The Student fails to provide an adequate synthesis of research collected for the paper. 10 out 20 points: References to scholarly sources are occasionally given; many statements seem unsubstantiated. Frequent errors in APA 6th Edition format, leaving the reader confused about the source of the information. There are significant errors of the formation in the references and citations. And/or there is a significant use of highly questionable sources. 15 out 20 points: Credible Scholarly sources are used effectively support claims and are, for the most part, clear and fairly represented. APA 6th Edition is used with only a few minor errors. There are minor errors in reference and/or citations. And/or there is some use of questionable sources. 20 points: Credible scholarly sources are used to give compelling evidence to support claims and are clearly and fairly represented. APA 6th Edition format is used accurately and consistently. The student uses above the maximum required references in the development of the assignment. Grammar (worth maximum of 20% of total points) Zero points: Student failed to submit the final paper. 5 points out of 20: The paper does not communicate ideas/points clearly due to inappropriate use of terminology and vague language; thoughts and sentences are disjointed or incomprehensible; organization lacking; and/or numerous grammatical, spelling/punctuation errors 10 points out 20: The paper is often unclear and difficult to follow due to some inappropriate terminology and/or vague language; ideas may be fragmented, wandering and/or repetitive; poor organization; and/or some grammatical, spelling, punctuation errors 15 points out of 20: The paper is mostly clear as a result of appropriate use of terminology and minimal vagueness; no tangents and no repetition; fairly good organization; almost perfect grammar, spelling, punctuation, and word usage. 20 points: The paper is clear, concise, and a pleasure to read as a result of appropriate and precise use of terminology; total coherence of thoughts and presentation and logical organization; and the essay is error free. Structure of the Paper (worth 10% of total points) Zero points: Student failed to submit the final paper. 3 points out of 10: Student needs to develop better formatting skills. The paper omits significant structural elements required for and APA 6th edition paper. Formatting of the paper has major flaws. The paper does not conform to APA 6th edition requirements whatsoever. 5 points out of 10: Appearance of final paper demonstrates the student’s limited ability to format the paper. There are significant errors in formatting and/or the total omission of major components of an APA 6th edition paper. The can include the omission of the cover page, abstract, and page numbers. Additionally the page has major formatting issues with spacing or paragraph formation. Font size might not conform to size requirements. The student also significantly writes too large or too short of and paper 7 points out of 10: Research paper presents an above-average use of formatting skills. The paper has slight errors within the paper. This can include small errors or omissions with the cover page, abstract, page number, and headers. There could be also slight formatting issues with the document spacing or the font Additionally the paper might slightly exceed or undershoot the specific number of required written pages for the assignment. 10 points: Student provides a high-caliber, formatted paper. This includes an APA 6th edition cover page, abstract, page number, headers and is double spaced in 12’ Times Roman Font. Additionally the paper conforms to the specific number of required written pages and neither goes over or under the specified length of the paper.
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