How Innovative Trade Finance Structures Can Remedy the Bad Loan Portfolios of Banks

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How Innovative Trade Finance Structures Can
Remedy the Bad Loan Portfolios of Banks
Adam Smith Associates Blog October 11, 2017
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How Innovative Trade Finance Structures Can
Remedy the Bad Loan Portfolios of Banks
Adam Smith Associates Blog October 11, 2017
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How Innovative Trade Finance Structures Can
Remedy the Bad Loan Portfolios of Banks
Adam Smith Associates Blog October 11, 2017
Your social media profile says a lot about you.
Who you're friends with, where you work or go to
school, and there might be a picture or two you
don't want the world to see. If we as people
want to make it as professionals then we need to
monitor what goes into our profile and weed out
unprofessional material, which could potentially
damage that reputation. The same is true for
financial institutions. They need to pride
themselves with a friendly profile to represent
the values of the institution. We have Facebook
profiles and banks have loan portfolios. 
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How Innovative Trade Finance Structures Can
Remedy the Bad Loan Portfolios of Banks
Adam Smith Associates Blog October 11, 2017
A financial institution is only as strong as
its profitability, capital strength, and
asset quality. However, poorly managed
portfolios can have negative effects for the
bank's image and credit worthiness. This guide
will help you understand a new remedy to bad
loan portfolios.  
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How Innovative Trade Finance Structures Can
Remedy the Bad Loan Portfolios of Banks
Adam Smith Associates Blog October 11, 2017
What Are Loan Portfolios?
Banks rely in great part on their ability to
provide loans to people. Lending is a crucial
part of the prosperity of financial institutions.
Loan portfolios are loans held for repayment and
a great asset and key factor for the revenue of
banks.  The value of a loan portfolio depends on
the principal and interest owed, and the credit
worthiness of the loan.
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How Innovative Trade Finance Structures Can
Remedy the Bad Loan Portfolios of Banks
Adam Smith Associates Blog October 11, 2017
What Are Loan Portfolios?
They can also bring great risk to the banks
economy if not managed properly. Loan portfolios
must go through annual audits to access  the
risks and identify control breaches. 
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How Innovative Trade Finance Structures Can
Remedy the Bad Loan Portfolios of Banks
Adam Smith Associates Blog October 11, 2017
What Are Trade Finance Structures?
Structured Trade Finance (STF) is a type of debt
finance. This type of finance route is used as
an alternative to lending.  Developing countries
use this type of finance in relation to cross
border transactions. The goal is to promote
trade by using  non-standard security. It's
commonly known as a commodity loan. What makes
STF loans appealing to borrowers is because the
strength of the transaction is not followed as
closely as a typical loan. 
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How Innovative Trade Finance Structures Can
Remedy the Bad Loan Portfolios of Banks
Adam Smith Associates Blog October 11, 2017
What Are Trade Finance Structures?
The focus of this loan is the cash flows as a
result of trade. Also, the transactions aren't
reflected in the balance sheet, which means it
helps with the flexibility of the credit terms
with the exporters.   
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How Innovative Trade Finance Structures Can
Remedy the Bad Loan Portfolios of Banks
Adam Smith Associates Blog October 11, 2017
How to Combine Both
Since STF is a type of debt finance, and an
alternative to lending, it registers
differently on the record books. This is a
solution for many bank portfolios because the
loan terms aren't as closely monitored.  The
cash flow is what shows on this type of loan, and
the interest owed and credit worthiness is more
lenient. Due to the trade in the transactions,
the jurisdictions are also specific to the
country where the trade is taking place. 
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How Innovative Trade Finance Structures Can
Remedy the Bad Loan Portfolios of Banks
Adam Smith Associates Blog October 11, 2017
How to Combine Both
Banks who want to clean up a portfolio can
benefit from this type of loan because the cash
flow will weight more than the interest owed on
the loan. If you have any more questions on how
STF can remedy a poorly managed loan portfolio
is always a good idea to consult  finance
advisory. If you want to stay on top of the
latest news and trends in finance, follow the
Adam Smith Associates Blog. 
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Adam Smith Associates Blog
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is for general information purposes only. dam
Smith Associates assumes no responsibility for
errors or omissions in the blog contents.
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