Securities Acceptable to Bankers

PBL – OCT 2022 – L3 – Q6 – Alternative Securities for Construction Loans and Lender Remedies

Identify alternative security for a construction loan where traditional assets are unsuitable, and outline steps to perfect it; list key remedies under the Borrowers and Lenders Act 2020 for borrower default.

Question

(a) Your key customer BBA Construction Ltd. is engaged in a contract for the construction of a 200 kilometer road in the Central Region. He has completed over 60 % of the project and has certified works of GHC 800,000 to be paid. He is applying for working capital loan of GHC 500,000 to purchase materials for the project.

He has no security to offer save the assets of the company which comprise a one storey office building and the road construction equipment. Your managing director is not enthused about taking a fixed and floating charge over the assets of the company as they are subject to rapid wear and tear. The key person Mr. Aras also does not have any personal landed property to offer.

From the above, identify what alternative security may be available in the circumstances and how you would proceed to take the security to ensure that the bank’s interest is protected. [16 Marks]

(b) You have been asked to deliver a lecture on the remedies of a lender in the event of a borrower defaulting in the servicing of a facility. Mention the four key remedies provided under the Borrowers and Lenders Act (2020) Act 1052. [4 Marks]

[Total marks:20]

Answer

Find Related Questions by Tags, levels, etc.

Tags: Alternative Securities, Assignment of contracts, Borrowers and Lenders Act, Collateral Registry, Construction Loans, Default Enforcement, Floating Charges, Lender Remedies
Level: Level 3

Topic: Securities Acceptable to Bankers
Series: OCT 2022

LPB – OCT 2019 – L3 – Q5 – Life Insurance Policies: Types, Parties, Insurable Interest & Keyman Insurance

Scenario involving a pharmaceutical company insuring a key employee's life as security for a bank overdraft; questions on policy definition, types suitable for bankers, parties involved, insurable interest justification, and impact of employee's resignation on the security.

Question

Life Insurance Policies-Types & Parties, Insurable Interest & Keyman Insurance.

As Executive Director/Retail, you call that 3 years ago, the CEO of Wiafe Chemists Limited (WCL), a small but growing Pharmaceutical Company, and long-standing Customer of your Kokonsa Branch of the Zenith Bank, sought your advice about whether they could ensure the life of their Chief Chemist; on whom the success of the Company largely depended. You advised that the WCL could, and they did.

Today, the CEO calls to your office and informs you that the Chief Chemist has resigned and asks about the status of their overdraft facility limit of GH¢25,000.00 covered by a Legal Assignment of the GH¢55,000.00 Life Policy over the life of the Chief Chemist.

Required: a) Define a Life Policy. b) State the types of Life Policies available to the Banker as Security for Bankers’ Advances. c) Who are the parties in a Life Policy; and how will these apply in the above scenario? d) Did the WCL have an Insurable Interest in the life of the Chief Chemist; and does the resignation of the Chief Chemist change the status/position of the Security to cause the Bank to request for another facility?

Answer

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Tags: Assignment, Bank Security, Insurable Interest, Keyman Insurance, Life Insurance Policies, Maturity, Parties in Policy, Resignation Impact, Types of Policies
Level: Level 3

Topic: Securities Acceptable to Bankers
Series: October 2019

POB-LAW-APR-2016-L3-Q7-Guarantees and Handling Prospective Guarantors

Scenario where a customer's overdrawn account requires a guarantee from a friend/business associate who sees it as a formality and owes the principal debtor money; how to handle the situation and meeting actions, and if different if the guarantor is not a company director.

Question

Your Private Banking customer, Reginald Tageo’s account is overdrawn GHS4,000,00 and you have called on him to provide security. He telephoned last Friday and told you he can only provide a guarantee from his friend and a business associate Kofi Darko who is a customer known to you, will visit your branch to meet with you in this regard. Kofi Darko is a Director in the KofDarko Building & Civil Engineering Works Ltd which has an account with your KofOrndua Branch.

This afternoon, Kofi Darko indeed called to seek an appointment to enable him visit your office to discuss the guarantee, and indicated that when Reginald Tageo requested him to sign a guarantee as security for his indebtedness, he had sign a reservations, but has come to learn that it is a formality and he is happy to sign for the sake of their friendship.

He added that he owes Reginald Tageo GHS5,000,000,00 in respect of some subcontracted works he has recently completed.
a) How will you handle this situation and what action will you take during your meeting with him?

b) Would your answer be the same if Kofi Darko had not been a director in a limited liability company?

Answer

Find Related Questions by Tags, levels, etc.

Tags: Banker Duties, Confidentiality, Debt Set-Off, Director Liability, Friendship Guarantees, Guarantees, Independent Advice, Misapprehension, Regulatory Compliance, Securities
Level: Level 3

Topic: Securities Acceptable to Bankers
Series: APRIL 2016

POB-LAW-APR-2016-L3-Q6-Debentures and Administrative Receivers

Scenario where a securities clerk asks the branch manager to explain what a debenture is, why the credit director requests a debenture over fixed and floating assets instead of just a fixed charge, and details on the meaning, appointment, and role of an administrative receiver for a company.

Question

As the Branch Manager of your High Street Branch in Accen, your Securities Clerk asks you the following questions:
a. We submitted any application to the Director/Credit showing the following details of Account X Ltd

Proposed Limit: GH$500,000,000;
Proposed Security: Fixed Charge over the factory, minimum forced sale value (FSV) GH$1,500,000,000 on a professional valuation.
The Director/Credit’s office has agreed to lend, but have expressed dissatisfaction with the security and have requested us to take a Debenture under.
Explain the following to your Clerk:
i. What is a Debenture?
ii. Why is the Director/Credit’s’ office requesting for a debenture over the company’s fixed and floating assets?
b. I have read some correspondence about the appointment of an “Administrative Receiver” for Z Limited. Can you explain what “Administrative Receiver” means, how the administrative receiver is appointed and what the administrative receiver does?

Answer

Find Related Questions by Tags, levels, etc.

Tags: Administrative Receiver, Appointment, Companies Act, Company Securities, Debenture, Duties, Fixed Charge, Floating Charge, Insolvency, Receivership
Level: Level 3

Topic: Securities Acceptable to Bankers
Series: APRIL 2016

LPB – APR 2016 – L3 – Q5 – Bank’s Position on Assignment of Term Life Policy as Security

Discuss bank's position on legal assignment of a term life policy as additional security for a mortgage, how assignment is taken and priority over subsequent assignments, effect if premiums stop, payout if suicide, and differences if endowment policy.

Question

The PREDEQ bank gives a mortgage of land for a customer0 \mathrm{}$ and, as an additional security, took an assignment of a 30-year Term Life Policy (not endowment situation) over the customer’s life – the policy monies being payable to the customer’s wife, at maturity on his death. Discuss this bank’s position in the following circumstances:

(a) How the Legal Assignment of the Policy was taken by the PREDEQ Bank: Supposing that someone else, at a later date, also takes an assignment of the Policy, which of the 2 assignments would have priority over the other?

(b) What would happen to the PREDEQ Bank’s security if the customer stopped paying the premiums?

(c) Would the Policy monies be payable if the customer committed suicide?

(d) Will the position be any different of the Policy was an Endowment Life Policy? If yes, indicate

Answer

Find Related Questions by Tags, levels, etc.

Tags: Assignment, Banking Advances, Endowment, Life Policies, Premiums, Priority, Security, Suicide, Term Life
Level: Level 2

Topic: Life policies, Securities Acceptable to Bankers
Series: APRIL 2016

PBL – OCT 2022 – L3 – Q6 – Alternative Securities for Construction Loans and Lender Remedies

Identify alternative security for a construction loan where traditional assets are unsuitable, and outline steps to perfect it; list key remedies under the Borrowers and Lenders Act 2020 for borrower default.

Question

From the above, identify what alternative security may be available in the circumstances and how you would proceed to take the security to ensure that the bank’s interest is protected. [16 Marks]

[Total marks:20]

Answer

Find Related Questions by Tags, levels, etc.

Tags: Alternative Securities, Assignment of contracts, Borrowers and Lenders Act, Collateral Registry, Construction Loans, Default Enforcement, Floating Charges, Lender Remedies
Level: Level 3

Topic: Securities Acceptable to Bankers
Series: OCT 2022

LPB – OCT 2019 – L3 – Q5 – Life Insurance Policies: Types, Parties, Insurable Interest & Keyman Insurance

Scenario involving a pharmaceutical company insuring a key employee's life as security for a bank overdraft; questions on policy definition, types suitable for bankers, parties involved, insurable interest justification, and impact of employee's resignation on the security.

Question

Life Insurance Policies-Types & Parties, Insurable Interest & Keyman Insurance.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Assignment, Bank Security, Insurable Interest, Keyman Insurance, Life Insurance Policies, Maturity, Parties in Policy, Resignation Impact, Types of Policies
Level: Level 3

Topic: Securities Acceptable to Bankers
Series: October 2019

POB-LAW-APR-2016-L3-Q7-Guarantees and Handling Prospective Guarantors

Scenario where a customer's overdrawn account requires a guarantee from a friend/business associate who sees it as a formality and owes the principal debtor money; how to handle the situation and meeting actions, and if different if the guarantor is not a company director.

Question

b) Would your answer be the same if Kofi Darko had not been a director in a limited liability company?

Answer

Find Related Questions by Tags, levels, etc.

Tags: Banker Duties, Confidentiality, Debt Set-Off, Director Liability, Friendship Guarantees, Guarantees, Independent Advice, Misapprehension, Regulatory Compliance, Securities
Level: Level 3

Topic: Securities Acceptable to Bankers
Series: APRIL 2016

POB-LAW-APR-2016-L3-Q6-Debentures and Administrative Receivers

Scenario where a securities clerk asks the branch manager to explain what a debenture is, why the credit director requests a debenture over fixed and floating assets instead of just a fixed charge, and details on the meaning, appointment, and role of an administrative receiver for a company.

Question

Proposed Limit: GH$500,000,000;
Proposed Security: Fixed Charge over the factory, minimum forced sale value (FSV) GH$1,500,000,000 on a professional valuation.
The Director/Credit’s office has agreed to lend, but have expressed dissatisfaction with the security and have requested us to take a Debenture under.
Explain the following to your Clerk:
i. What is a Debenture?
ii. Why is the Director/Credit’s’ office requesting for a debenture over the company’s fixed and floating assets?
b. I have read some correspondence about the appointment of an “Administrative Receiver” for Z Limited. Can you explain what “Administrative Receiver” means, how the administrative receiver is appointed and what the administrative receiver does?

Answer

Find Related Questions by Tags, levels, etc.

Tags: Administrative Receiver, Appointment, Companies Act, Company Securities, Debenture, Duties, Fixed Charge, Floating Charge, Insolvency, Receivership
Level: Level 3

Topic: Securities Acceptable to Bankers
Series: APRIL 2016

LPB – APR 2016 – L3 – Q5 – Bank’s Position on Assignment of Term Life Policy as Security

Discuss bank's position on legal assignment of a term life policy as additional security for a mortgage, how assignment is taken and priority over subsequent assignments, effect if premiums stop, payout if suicide, and differences if endowment policy.

Question

(b) What would happen to the PREDEQ Bank’s security if the customer stopped paying the premiums?

(c) Would the Policy monies be payable if the customer committed suicide?

(d) Will the position be any different of the Policy was an Endowment Life Policy? If yes, indicate

Answer

Find Related Questions by Tags, levels, etc.

Tags: Assignment, Banking Advances, Endowment, Life Policies, Premiums, Priority, Security, Suicide, Term Life
Level: Level 2

Topic: Life policies, Securities Acceptable to Bankers
Series: APRIL 2016

Topic: Securities Acceptable to Bankers

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PBL – OCT 2022 – L3 – Q6 – Alternative Securities for Construction Loans and Lender Remedies

Identify alternative security for a construction loan where traditional assets are unsuitable, and outline steps to perfect it; list key remedies under the Borrowers and Lenders Act 2020 for borrower default.

LPB – OCT 2019 – L3 – Q5 – Life Insurance Policies: Types, Parties, Insurable Interest & Keyman Insurance

Scenario involving a pharmaceutical company insuring a key employee's life as security for a bank overdraft; questions on policy definition, types suitable for bankers, parties involved, insurable interest justification, and impact of employee's resignation on the security.

POB-LAW-APR-2016-L3-Q7-Guarantees and Handling Prospective Guarantors

Scenario where a customer's overdrawn account requires a guarantee from a friend/business associate who sees it as a formality and owes the principal debtor money; how to handle the situation and meeting actions, and if different if the guarantor is not a company director.

POB-LAW-APR-2016-L3-Q6-Debentures and Administrative Receivers

Scenario where a securities clerk asks the branch manager to explain what a debenture is, why the credit director requests a debenture over fixed and floating assets instead of just a fixed charge, and details on the meaning, appointment, and role of an administrative receiver for a company.

LPB – APR 2016 – L3 – Q5 – Bank’s Position on Assignment of Term Life Policy as Security

Discuss bank's position on legal assignment of a term life policy as additional security for a mortgage, how assignment is taken and priority over subsequent assignments, effect if premiums stop, payout if suicide, and differences if endowment policy.

PBL – OCT 2022 – L3 – Q6 – Alternative Securities for Construction Loans and Lender Remedies

Identify alternative security for a construction loan where traditional assets are unsuitable, and outline steps to perfect it; list key remedies under the Borrowers and Lenders Act 2020 for borrower default.

LPB – OCT 2019 – L3 – Q5 – Life Insurance Policies: Types, Parties, Insurable Interest & Keyman Insurance

Scenario involving a pharmaceutical company insuring a key employee's life as security for a bank overdraft; questions on policy definition, types suitable for bankers, parties involved, insurable interest justification, and impact of employee's resignation on the security.

POB-LAW-APR-2016-L3-Q7-Guarantees and Handling Prospective Guarantors

Scenario where a customer's overdrawn account requires a guarantee from a friend/business associate who sees it as a formality and owes the principal debtor money; how to handle the situation and meeting actions, and if different if the guarantor is not a company director.

POB-LAW-APR-2016-L3-Q6-Debentures and Administrative Receivers

Scenario where a securities clerk asks the branch manager to explain what a debenture is, why the credit director requests a debenture over fixed and floating assets instead of just a fixed charge, and details on the meaning, appointment, and role of an administrative receiver for a company.

LPB – APR 2016 – L3 – Q5 – Bank’s Position on Assignment of Term Life Policy as Security

Discuss bank's position on legal assignment of a term life policy as additional security for a mortgage, how assignment is taken and priority over subsequent assignments, effect if premiums stop, payout if suicide, and differences if endowment policy.

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PBL – OCT 2022 – L3 – Q6 – Alternative Securities for Construction Loans and Lender Remedies

Identify alternative security for a construction loan where traditional assets are unsuitable, and outline steps to perfect it; list key remedies under the Borrowers and Lenders Act 2020 for borrower default.

You're reporting an error for "PBL – OCT 2022 – L3 – Q6 – Alternative Securities for Construction Loans and Lender Remedies"

LPB – OCT 2019 – L3 – Q5 – Life Insurance Policies: Types, Parties, Insurable Interest & Keyman Insurance

Scenario involving a pharmaceutical company insuring a key employee's life as security for a bank overdraft; questions on policy definition, types suitable for bankers, parties involved, insurable interest justification, and impact of employee's resignation on the security.

You're reporting an error for "LPB – OCT 2019 – L3 – Q5 – Life Insurance Policies: Types, Parties, Insurable Interest & Keyman Insurance"

POB-LAW-APR-2016-L3-Q7-Guarantees and Handling Prospective Guarantors

Scenario where a customer's overdrawn account requires a guarantee from a friend/business associate who sees it as a formality and owes the principal debtor money; how to handle the situation and meeting actions, and if different if the guarantor is not a company director.

You're reporting an error for "POB-LAW-APR-2016-L3-Q7-Guarantees and Handling Prospective Guarantors"

POB-LAW-APR-2016-L3-Q6-Debentures and Administrative Receivers

Scenario where a securities clerk asks the branch manager to explain what a debenture is, why the credit director requests a debenture over fixed and floating assets instead of just a fixed charge, and details on the meaning, appointment, and role of an administrative receiver for a company.

You're reporting an error for "POB-LAW-APR-2016-L3-Q6-Debentures and Administrative Receivers"

LPB – APR 2016 – L3 – Q5 – Bank’s Position on Assignment of Term Life Policy as Security

Discuss bank's position on legal assignment of a term life policy as additional security for a mortgage, how assignment is taken and priority over subsequent assignments, effect if premiums stop, payout if suicide, and differences if endowment policy.

You're reporting an error for "LPB – APR 2016 – L3 – Q5 – Bank’s Position on Assignment of Term Life Policy as Security"

PBL – OCT 2022 – L3 – Q6 – Alternative Securities for Construction Loans and Lender Remedies

Identify alternative security for a construction loan where traditional assets are unsuitable, and outline steps to perfect it; list key remedies under the Borrowers and Lenders Act 2020 for borrower default.

You're reporting an error for "PBL – OCT 2022 – L3 – Q6 – Alternative Securities for Construction Loans and Lender Remedies"

LPB – OCT 2019 – L3 – Q5 – Life Insurance Policies: Types, Parties, Insurable Interest & Keyman Insurance

Scenario involving a pharmaceutical company insuring a key employee's life as security for a bank overdraft; questions on policy definition, types suitable for bankers, parties involved, insurable interest justification, and impact of employee's resignation on the security.

You're reporting an error for "LPB – OCT 2019 – L3 – Q5 – Life Insurance Policies: Types, Parties, Insurable Interest & Keyman Insurance"

POB-LAW-APR-2016-L3-Q7-Guarantees and Handling Prospective Guarantors

Scenario where a customer's overdrawn account requires a guarantee from a friend/business associate who sees it as a formality and owes the principal debtor money; how to handle the situation and meeting actions, and if different if the guarantor is not a company director.

You're reporting an error for "POB-LAW-APR-2016-L3-Q7-Guarantees and Handling Prospective Guarantors"

POB-LAW-APR-2016-L3-Q6-Debentures and Administrative Receivers

Scenario where a securities clerk asks the branch manager to explain what a debenture is, why the credit director requests a debenture over fixed and floating assets instead of just a fixed charge, and details on the meaning, appointment, and role of an administrative receiver for a company.

You're reporting an error for "POB-LAW-APR-2016-L3-Q6-Debentures and Administrative Receivers"

LPB – APR 2016 – L3 – Q5 – Bank’s Position on Assignment of Term Life Policy as Security

Discuss bank's position on legal assignment of a term life policy as additional security for a mortgage, how assignment is taken and priority over subsequent assignments, effect if premiums stop, payout if suicide, and differences if endowment policy.

You're reporting an error for "LPB – APR 2016 – L3 – Q5 – Bank’s Position on Assignment of Term Life Policy as Security"

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