Rollover
A prolongation ( Latin prolungare , "to extend") is generally the extension of the original period of validity of a contract and especially in banking the contract modification of a credit agreement in which the due date is postponed while maintaining the other credit conditions .
General
Prolongations are only available for contracts that contain a time limit with an end date ( time determination according to Section 163 BGB ), according to which a contractual partner is obliged to provide the contractual service by the specified time . If he cannot comply with this obligation, he must ask the other contractual partner to extend the contract in good time before the end of the performance period in order to avoid debtor default . The other contractual partner is not obliged to do this. If he agrees to a prolongation, the original contract will be changed.
Lending business
According to AT 2.3 MaRisk of December 2012, a prolongation requires a new credit decision under banking supervisory law , as risk-relevant facts ( term ) change. The borrower's application for prolongation must therefore always be followed by a credit check by the lender . In this case, no distinction between internal bank (internal extension externally unlimited committed credits distinguished) and external extensions. In the lending business , prolongations occur when the borrower cannot meet the original maturity of a loan. Since personal loans even during the repayment term regularly repaid , is a prolongation is rarer here. The postponement of due repayment installments is initially considered a deferral , only if these are not made up later and a deferral-related extension occurs in the repayment plan, does it come to a prolongation. Bullet loans are more frequently affected by a rollover. Regardless of the reason for this delay, credit institutions rate a prolongation as poor financial planning and negatively in the rating or credit scoring . The prolongation represents a change in the contract, so that it must take place before the original loan agreement expires and is otherwise carried out while maintaining the other loan conditions ( loan interest , repayment agreements , loan collateral ). It is by means of the borrower 's signature to accept . In the case of loan collateral, the purpose of the collateral must usually be adapted to the prolongation in the collateral agreement. In the event of a change, a notice of termination must be given 6 months in advance. At the latest 3 months before the commitment period expires, the bank will prepare an offer for follow-up financing in the sense of the prolongation.
Futures
As a rule, forward transactions must be fulfilled by both counterparties when they fall due . In the case of a prolongation, a distinction must be made between the prolongation at the current market rate and the prolongation at the old rate. A prolongation to the old rate (in the technical jargon "shift") is permitted abroad, in Germany it is prohibited because an agreement on rates deviating from the market has not been permitted since October 1995. The cited letter was replaced in December 2010 by MaRisk, according to which, according to BTO 2.2.1 No. 2, “commercial transactions on conditions that are not in line with the market are fundamentally prohibited”. Exceptions must be objectively justified by the customer (the bank customer must be a non-bank ) and clearly evident from business documents. If a forward transaction is to be prolonged on the old exchange rate, this is exceptionally only possible if the underlying transaction is proven. The exporter has to prove the delayed receipt of the money, the importer the delayed payment obligation. In this case, the spot rate of the swap transaction is identical to the forward rate of the due forward transaction. Since futures transactions are not prolonged in the interbank market , the bank must compensate for the prolongation of the customer business with a new swap transaction at current rates; the difference is included in the customer swap rate for the prolongation.
Change
Bills of exchange contain an expiry date ( Art. 1 No. 4 WG ), which obliges the drawee by accepting to pay the bill when it expires ( Art. 28 Para. 1 WG). The flat share does not have a prolongation, it happens by issuing a new bill of exchange with a later expiry date and step by step handing over the old bill of exchange without payment to the drawee. The bill prolongation is therefore the issue of a new bill of exchange with a postponed expiry date.
Other contracts
Other legal relationships , in particular terms of payment or delivery , can also be extended. If the period of validity of an international treaty is extended before it has expired, it is also referred to as a prolongation.
Demarcation
The prolongation is not a legal term , but has become common in finance as a term for a contract extension. In particular, a distinction must be drawn between prolongation and novation . Whether the loan agreement is simply being extended or even a novation is a matter of interpretation . Because of the drastic legal consequences of a novation, according to the BGH , when determining the will to cancel the old debt relationship and replace it with a newly established one, caution is required and therefore, in case of doubt, only a mere contract amendment (prolongation) can be assumed. With the prolongation, only the change in the loan term is brought about, other loan terms remain unchanged, so that they do not create a new debt relationship. Only rescheduling comes close to a novation. The deferral is also associated with the postponement of due dates, but always serves to rescue a loan claim that cannot currently be serviced without driving the borrower into bankruptcy .
The expiry of a fixed interest period does not represent a prolongation, but means an interest rate adjustment of the loan interest to the current market development . This does not change the term of the loan. This also applies to interest rate adjustments as part of an interest rate escalation clause . Other changes (loan collateral, loan amount) are not a prolongation as long as they do not result in an extension of the term.
See also
Individual evidence
- ↑ Procedure of the prolongation. Retrieved May 17, 2017 .
- ↑ Hannes Enthofer / Patrick Haas (eds.), Handbuch Treasury / Treasurer's Handbook , 2012, p. 555
- ↑ BaFin letter of October 23, 1995, announcement on minimum requirements for the operation of commercial transactions by credit institutions , Section 6.2, Ref .: I 4 - 32 -3/86
- ↑ Lieselotte Souren, Fundamentals and Practice of Foreign Exchange Trading , 1995, p. 71
- ↑ Peter Bülow, Heidelberg Commentary on the Bill of Exchange Act / Check Act , 2004, p. 195
- ↑ BGH, judgment of October 26, 2010 - Az .: XI ZR 367/07
