a) Mr. Elon Markson is the newly appointed Managing Director at Rural Bank Jamaica Ltd, a...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
a) Mr. Elon Markson is the newly appointed Managing Director at Rural Bank Jamaica Ltd, a small boutique commercial bank. He has taken note that the bank has being in a loss position for the last three years and recently customers have started to reduce their savings balances with the institution. An analysis of the loan portfolio shows that ninety per cent of the debt is owed almost equally by public passenger vehicle operators who use their vehicles as collateral for the loan, informal commercial importers and bar owners. These bar premises are also used as collateral for their borrowings and they are all located in Santa Cruz, St. Elizabeth where the bank operates one of its two branches. The analysis further shows that most of the loans were given at a fixed rate when interest rates were low. Interest rates have since started to climb steadily. Mr. Markson was at a meeting recently with industry colleagues when the word Securitisation was mentioned He wants to assess alternatives facing the bank and has now requested you, a Senior Credit Analyst, to present for the next management meeting, a paper setting out and describing at least three circumstances under which the use of securitization could benefit Rural Bank Jamaica Ltd. He has also requested that you use a local example to support one of your answers. (10 marks) b) Name one company in Jamaica that is not a financial institution that could benefit from securitization (1 Marks) a) Mr. Elon Markson is the newly appointed Managing Director at Rural Bank Jamaica Ltd, a small boutique commercial bank. He has taken note that the bank has being in a loss position for the last three years and recently customers have started to reduce their savings balances with the institution. An analysis of the loan portfolio shows that ninety per cent of the debt is owed almost equally by public passenger vehicle operators who use their vehicles as collateral for the loan, informal commercial importers and bar owners. These bar premises are also used as collateral for their borrowings and they are all located in Santa Cruz, St. Elizabeth where the bank operates one of its two branches. The analysis further shows that most of the loans were given at a fixed rate when interest rates were low. Interest rates have since started to climb steadily. Mr. Markson was at a meeting recently with industry colleagues when the word Securitisation was mentioned He wants to assess alternatives facing the bank and has now requested you, a Senior Credit Analyst, to present for the next management meeting, a paper setting out and describing at least three circumstances under which the use of securitization could benefit Rural Bank Jamaica Ltd. He has also requested that you use a local example to support one of your answers. (10 marks) b) Name one company in Jamaica that is not a financial institution that could benefit from securitization (1 Marks)
Expert Answer:
Answer rating: 100% (QA)
Securitization is a process of pooling together financial assets such as loans and selling them to i... View the full answer
Related Book For
Cost Accounting A Managerial Emphasis
ISBN: 978-0133392883
6th Canadian edition
Authors: Horngren, Srikant Datar, George Foster, Madhav Rajan, Christ
Posted Date:
Students also viewed these finance questions
-
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
-
Read the case study "Southwest Airlines," found in Part 2 of your textbook. Review the "Guide to Case Analysis" found on pp. CA1 - CA11 of your textbook. (This guide follows the last case in the...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
In contrast to our analysis in Section 5.4.3, Carlton and Loury (1980) suggest that a Pigouvian tax alone will not lead to a long run social optimum for competitive polluting firms. Using their...
-
Determine the Hamiltonian an Hamiltons equations of motion for the double Atwood machine of Example 7.8.
-
Sunbeam Corporation manufactures and sells a variety of small household appliances, including toasters, food processors, and waffle grills. Exhibit 6.17 presents a statement of cash flows for Sunbeam...
-
Mr T.G.R. Davies of the Grand SIam division has just submitted a budgeted ROI for the next year of 60%. Mr G. Wheel of the TripIe Crown division has submitted a 15% budgeted Rar. The company,...
-
Use the information about each of the following samples to compute the confidence interval to estimate p. a. n = 44 and p = .51; compute a 90% confidence interval. b. n = 300 and p = .82; compute a...
-
Balloons By Sunset (BBS) is considering the purchase of two new hot air balloons so that it can expand its desert sunset tours. Various information about the proposed investment follows: (Euture...
-
At a local university, the Student Commission on Programming and Entertainment (SCOPE) is preparing to host its first rock concert of the school year. To successfully produce this rock concert, SCOPE...
-
The current expected return on the Tesla stock is 43%, the riskless rate of interest is 2%, the return on the market portfolio is 15% and the standard deviation of the market portfolio is 20% c. What...
-
Explain different ways of organizing labor.
-
Pickwick, Snodgrass and Tupman are in partnership, making up accounts to 31 March annually. Each partner receives 6% interest on fixed capital. Pickwick and Tupman are entitled to annual salaries of...
-
Nickleby, Copperfield and Drood have traded as equal partners for many years, making up accounts to 31 December each year. As from 1 April 2023 they agree to share profits in the ratio 1:2:2. The...
-
Irma is self-employed. Her trading income for 2023-24 is 69,950 and during the year she makes net contributions to a registered pension scheme of 6,000. Her only other income in 2023-24 consists of...
-
Summarize how people in foraging, pastoral, horticultural, and agricultural societies generally allocate resources.
-
The Simpson Corporation is trying to choose between thefollowing two mutually exclusive design projects:YearCash Flow (I)Cash Flow (II)0?$56,000?$18,800126,00010,1 2 answers
-
At Glass Company, materials are added at the beginning of the process and conversion costs are added uniformly. Work in process, beginning: Number of units Transferred - in costs Direct materials...
-
Assume the same facts as in Exercise 22-18, except that a different hospital, City Hospital, is a taxpaying entity. The income tax rate is 30% for all transactions that affect income taxes. REQUIRED...
-
The Margro Corporation is an automotive supplier that uses automatic turning machines to manufacture precision parts from steel bars. Margros inventory of raw steel averages $600,000. John Oates,...
-
Support division cost allocation, reciprocal method (continuation of 14-20). Refer to the data given in Exercise 14-20. REQUIRED 1. Allocate the two support divisions costs to the two operating...
-
Assume that you believe purchasing power parity (PPP) exists. You expect that inflation in Canada during the next year will be 3 percent and inflation in the United States will be 8 percent. Today...
-
(a) Explain the limitations of HCA when prices are rising. (b) Why has the HCA model survived in spite of its shortcomings in times of inflation?
-
To what extent are CCA statements useful to an investor?
Study smarter with the SolutionInn App