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Sometimes there might be the need to arrange a syndicated loan,[1] which means involving several different lenders in providing parts of the same loan. This might happen when the debt amount is particularly large and therefore too much to be provided by a single lender or above its risk exposure levels. In order to assemble a multibank lending syndicate, a bank will receive a mandate as syndicate manager from the borrower. After the agreement with all the participating banks has been reached, the syndicate manager is usually appointed as the agent bank,[2] i.e. the bank which manages the relations with the borrower for the full term of the loan (in particular, monitoring compliance with covenants, collection of instalments, reports to oversight authorities and recovery actions). In particular the agent bank is responsible for notifying other banks of advances or drawdowns by the borrower and changes in interest rate.

When determining the role and responsibility of the agent bank an interbank agreement is concluded in which, inter alia, the agent bank is charged with carrying out all activities concerning the conclusion of agreements relating to the credit facilities, drawdown and the administration of those facilities, as well as carrying out (according to a mandate which may vary in scope) procedural, preventive, or enforcement measures against the borrower or any other guarantors or obligors in order to protect the rights created under the loan agreement.


Different contractual forms may be used in order to finance a real estate transaction, provided that such contracts are appropriate for securing the financial resources from the value of the collateralized property.

Bank loans may come in various forms and are the funds mainly used by companies in order to obtain part of the financial resources necessary to cover their needs. These loans may be classified into two groups.

1. Bank account overdraft facilities, where amounts exceeding those deposited may be withdrawn, thus giving rise to account overdrafts (negative balances for the borrower and positive balances for the bank). These forms are flexible in nature because they make it possible to switch between withdrawals and repayments. They may be subdivided into unsecured overdrafts, secured overdrafts, documentary overdrafts, credit lines, and bank account advances on stocks or goods.

2. Fixed maturity loans – such loans are disbursed in one or more predetermined instalments and must be repaid at specific maturity dates.

The granting of a revolving secured credit line is the most flexible form of financing for real estate, especially for development/refurbishment projects. The bank grants access to credit up to a maximum limit, which may be used according to the borrower's requirements. This credit line is generally granted in order to finance a specific transaction. The borrower undertakes to redeem the original credit line through full or partial repayments along with the payment of the accrued interests, and may use the cash made available to it according to its own requirements through one or more withdrawals returning the principal with subsequent repayments. The borrower may also borrow back any part of the facility which has been repaid.

  • [1] On syndication of real estate loans please see paragraph 1.5.3.
  • [2] Often used synonymously with lead bank or lead manager.
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