Stand-by credit
Stand-by credit ( English stand-by facility ) is in the banking system and the International Monetary Fund a support loan that serves to secure the liquidity of the borrower .
Companies
In banking, it is a loan agreement ( stand-by loan ) in which a bank promises to make a certain loan amount available to the borrower as soon as an uncertain or even improbable financing requirement arises . This safety line is only available for companies . It is a binding loan commitment , which serves to secure the borrower's liquidity, in exceptional cases to be able to obtain funds from the bank without any obstacles and without loss of time . The term of the credit line is between one and five years. It is intended as a liquidity reserve that can be used for sudden credit bottlenecks ( credit crunch ), large-scale company acquisitions or debt-financed takeovers . In these cases the line is only used as pre-financing until better financing is available. Specifically, rating agencies also require evidence of stand-by facilities for refinancing any repurchase of commercial paper that the borrower has issued .
Under banking supervisory law , such irrevocable loan commitments with an initial term of up to one year with a credit conversion factor of 20% and loan commitments with an initial term of more than one year with 50% of the credit line must be backed by own funds . Loan commitments that can be canceled at any time without reservation and without prior notice by the bank or that effectively automatically expire in the event of a significant deterioration in the borrower's financial situation are given a credit conversion factor of 10%. For this reason, the banks usually charge a commitment interest on the unused part of the credit line.
IMF loan
Since October 1, 1952, the IMF member states have been able to claim so-called stand-by credits in addition to special drawing rights . According to Article XXX (b) of the IMF Convention, a stand-by loan is the right of an IMF member state to access its “General Resources Account” with a certain loan amount, if the IMF has decided. Strictly speaking, it is a drawing right that exceeds the quota to which the member state is entitled. These stand-by arrangements are one of the IMF's credit instruments and allow an IMF member state to call up foreign currency up to a certain maximum amount in the event of balance of payments difficulties . They later became an important element of the IMF instrument in Latin America. Belgium took out its first loan in October 1952. Large member states such as France (October 1956) and Great Britain (November 1967) were among the borrowers when they ran into balance of payments difficulties. By April 1966, the IMF approved a total of US $ 9.6 billion in stand-by loans with a term of up to 2 years and which can be extended. During the Argentina crisis in July 1991 alone, the country received US $ 1 billion in stand-by loans. Mexico received the largest loan in January 1995 with US $ 18 billion. In April 2000, the standby loan volume was US $ 5.7 billion for 16 countries. Further credit conditions include compliance with the IMF's conditionality policy and credit commitments by the creditor states to the borrowing member state. The support loan is used to restore the external balance in the borrowing member state.
See also
Individual evidence
- ↑ Kai-Oliver Knops, Handbook on German and European Banking Law , 2009, p. 700
- ↑ Georges Paillard, Nature and Functions of Currency Reserves and Development of the Currency Reserve Stock of the Swiss National Bank , 1964, p. 83
- ^ IMF, Articles of Agreement of the International Monetary Fund, last amended on April 28, 2008 , Article XXX (b)
- ↑ Alexander Szodruch, State Insolvency and Private Creditors , 2008, p. 91
- ↑ Wolfgang König, Foreign Exchange Policy in Latin America: National Exchange Rate Systems and the International Monetary Fund , 1969, p. 28
- ↑ Gerhard Müller / Josef Löffelholz, Bank-Lexikon: Concise Dictionary for Banks and Savings Banks , 1973, Sp. 939