A bank has a long-term relationship with a particular business customer.However,recently the bank has become concerned because of a potential deterioration in the customer's income.In addition,regulators have expressed concerns about the bank's capital position.The business customer has asked for a renewal of its $25 million dollar loan with the bank.Which of the following can be used to help this situation?

Question

Quizplus · Accepted Answer

Selling the loan (Loan sale) can help the bank reduce its exposure to the potentially deteriorating credit risk of the business customer, while also improving its capital position as required by regulators.

A Bank Has a Long-Term Relationship with a Particular Business