2.1 Lending Products

Term Loans

Traditional amortizing loans with fixed repayment schedules. Used for:

  • Capital expenditure financing

  • Acquisition financing

  • Working capital needs

Key features: Tenor (typically 3-7 years), amortization schedule, interest rate basis (fixed or floating), covenants, and security/collateral requirements .

Revolving Credit Facilities (Revolvers)

Flexible credit lines that clients can draw, repay, and re-draw as needed. Used for:

  • Working capital management

  • Seasonal financing needs

  • Liquidity backstops

Revolvers typically include commitment fees on undrawn amounts and are subject to annual reviews .

Syndicated Loans

Loans provided by a group of banks to a single borrower, coordinated by one or more lead arrangers. Features include:

  • Underwriting risk: Lead banks guarantee full amount

  • Syndication process: Selling down participation to other banks

  • Pricing: Based on credit risk, market conditions, and underwriting commitment 

The syndicated loan market follows standard documentation as recommended by the Loan Market Association (LMA) .

2.2 Trade Finance

Trade finance facilitates international trade by reducing payment and performance risks :

Letters of Credit (LCs)

Bank guarantees of payment to exporters, subject to presentation of complying documents. Types include:

  • Confirmed LCs: Adding a second bank’s guarantee

  • Unconfirmed LCs: Single bank guarantee

  • Transferable LCs: Allow first beneficiary to transfer to suppliers

Documentary Collections

Bank-mediated exchange of documents for payment without the guarantee of a letter of credit.

Pre-shipment and Post-shipment Financing

  • Pre-shipment: Financing production before goods are shipped

  • Post-shipment: Financing receivables after goods are shipped

Forfaiting and Factoring

  • Factoring: Sale of receivables to a factor at a discount

  • Forfaiting: Sale of medium-term receivables without recourse 

2.3 Leasing and Asset Finance

Hire Purchase

Client purchases asset through installment payments; ownership transfers after final payment.

Finance Lease

Bank purchases asset and leases to client; client bears ownership risks and rewards; lease payments cover full cost plus profit .

Operating Lease

Short-term lease where bank retains ownership risks; client pays for use only.

2.4 Treasury and Cash Management Services

Corporate banks provide sophisticated treasury services including:

  • Domestic and international payment processing

  • Liquidity management and sweeping

  • Account reconciliation and reporting

  • Foreign exchange services

  • Interest rate and currency risk management 

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