Borrower Unit
Borrower unit (KN unit) is a term used in the banking sector that describes the legally required grouping of legally and / or economically independent borrowers at a credit institution into a single, hypothetical borrower for the purposes of multi-million dollar lending according to Section 14 KWG .
aims
The aim of creating borrower units is to map potential risk concentrations ( cluster risk ) in loans to borrowers that are linked by legal and / or economic relationships. The multi-million loan regulations therefore require an internal bank consolidation of these borrowers to form a hypothetical single borrower so that the entire cumulative credit risk is subject to the reporting requirements according to § 14 KWG.
Legal bases
The combination of several borrowers into a single borrower is prescribed on two levels. Since the CRD IV Implementation Act - the Capital Adequacy Ordinance and the Capital Adequacy Directive - the legislature has differentiated in Section 19 (2) KWG between borrower units that are to be formed for the purposes of Section 14 KWG and the group of affiliated customers who - in addition to the requirements by Art. 392 ff. Capital Adequacy Ordinance - are only to be formed for the purposes of Sections 13, 15 and 18 KWG. Therefore, since the implementation of the CRD-IV, all the letters issued by BaFin to date have been largely outdated in accordance with BaFin's letter 5/2014.
Types of Borrower Units
The individual credit regulations of the KWG can only be observed by credit institutions if the scope of the term “ borrower ” has been clarified. This term is defined in § 14 GroMiKV , while the KWG deals with the "borrower unit". The central regulatory norm for this is Section 19 (2) KWG. The main concern of this provision is that loans to legally and / or economically independent natural or legal persons must be consolidated internally by a credit institution as a single borrower if certain conditions are met. The provision of Section 19 (2) KWG distinguishes between three types:
- Two or more natural or legal persons or commercial partnerships , if one of them can exert a direct or indirect controlling influence on the other or the others. In particular, there is a direct or indirect controlling influence
- for all companies that are consolidated within the meaning of Section 290 (2) HGB , or
- for all companies that are linked by corporate contracts that stipulate that one company is obliged to transfer all of its profits to another, or
- when another company or a person holds voting rights or capital shares in a company of 50% or more, regardless of whether these shares are managed in a trust relationship.
- Commercial partnerships or corporations and their personally liable partners as well as partnerships and their partners.
- All companies that belong to the same group within the meaning of Section 18 of the German Stock Corporation Act .
The corporation under stock corporation law is the main addressee of the borrower unit. In addition, a borrower unit must also be formed if there is only a 50% equity stake - such as in joint ventures or special purpose vehicles . Natural persons are also grouped together to form the single borrower if they take out loans and act as general partners of a company that is also a borrower at the same bank. This ensures that companies and their personally liable partners are seen as one borrower unit, because the company's payment difficulties could also spread to the partner due to the liability function of its partner; the law allows no exception. All three types are to be used cumulatively.
Combining the individual loans into a single loan is intended to counter the risk that a borrower's possible financial difficulties due to their legal and / or economic relationship with other borrowers could cause them to run into payment difficulties and thus the bank could face several credit risks sees. This summary prevents the isolated consideration of each individual borrower, because a consolidated view is required because of the borrower relationships.
meaning
The borrower unit according to section 19 (2) KWG has lost a lot of importance from a banking supervisory perspective, since it is only relevant for reporting under section 14 KWG and primarily requires a summary on the basis of formal reasons. The group of affiliated customers is exclusively decisive for the areas of large lending , loans to organs , the disclosure requirements under Section 18 KWG and for internal risk management . There are many overlaps between the group of connected customers and the borrower entity. In cases of control under stock corporation law, the borrower unit is usually identical to the group of connected customers in accordance with Section 19 (2) KWG. In the case of 50% participation, the borrower unit is i. d. Typically larger than the group of connected customers; In the case of purely economic dependencies, such as those that can arise from guarantees and significant delivery and loan relationships, the group of connected customers depicts the risk more comprehensively. Another major difference is how the groups are cut; In the case of the borrower unit, the respective facts in accordance with Section 19 (2) KWG must be cumulatively applied; in the case of the group of affiliated customers, the domino effect applies, whereby in the case of control according to the EBA guidelines, it is assumed that the controlled company is risk-dependent on the controlling person.
Web links
- German Banking Act gesetze-im-internet.de (PDF; 615 kB)
- Stock Corporation Act
literature
- Nikolaus Demmelmair: The large loan, million dollar, and organ loan regulations . 8th edition 2018, Sparkassenverlag, ISBN 978-3-09-304790-9
- Beck, Samm, Kokemoor: Law on the Credit System . KWG commentary with materials and additional regulations. CF Müller, Heidelberg [loose-leaf collection], ISBN 978-3-8114-5670-9
