【正文】 us on the recovery of problem loans。 ? More developed banking expertise and credit risk evaluation skills。 ? Improved internal bank system (early warning systems, collateral requirements, credit information needs). Workout units can make a significant difference in restructuring loan portfolios, particularly when supported by effective technical assistance. 4. Loan Restructuring and Loan Rollover Casebycase loan restructuring is mon in marketoriented economies, particularly 濟(jì)南大學(xué)畢業(yè)論文 外文資料翻譯 3 when borrowers are unable to meet the original terms of the loan agreement due to external factors. These restructuring invariably changes in the amount, terms and /or schedule of interest rates, principal repayment, and collateral values. Loan covenants ( ratios, report requirements) often change to facilitate pliance. In some cases, radical measures such as replacing management are involved. This approach is similar to what workout units attempt to do: recover portions of loan portfolios which have deteriorated and are nonperforming. However, workout units are often organized on the basis of sector, location or bank exposure. Casebycase loan restructuring is conducted on an individualized basis. The benefits of individual casebycase loan restructurings include: ? Reinforcement of the bankclient relationship. ? Retention of the loan by the bank on its balance sheet, even if provisions are made for possible losses. ? Preservation of the firm39。s relations with other parties (trade creditors, other banks, buyers, employees), thereby maintaining its reputation without embarrassing and costly bankruptcy / liquidation procedures. As with debtequity swaps, the risk to the bank is that it is overly optimistic about prospects, and that additional resources are mitted to the borrower adding to bank losses and reduced loan able funds at a future date. This has occurred frequently in transition economies (such as China, East European countries, former Soviet Union). In transition economy banks, the closest approximation to the Western loan restructuring has been the loan rollover which has been a mon practice. Rollovers generally involve the following two techniques: ? Simple rollover of principal on/before the due date, with the enterprise meeting interest obligations. ? Rollover of principal on/before due date, with interest added back to the principal amount (“interest capitalization). The first technique is legitimate and rational unless the enterprise is unable to repay principal, and likely to remain impaired in the future. The second technique often reflects a troubled loan and enterprise, and has been typically practiced in transition economy banking systems. Further more, the latter technique has been acpanied by accounting treatment which mistakenly recognizes these assets as performing loans, artificially inflating ine statements and balance sheet book values. 5. Debtequity Swaps and Loan Sales / Asset Swap Debtequity swap results in bank ownership of enterprises occur with differing frequencies in different countries. In some countries, bank ownership of enterprises is mon (German interlocking directorates), while in other countries it is strictly regulated (USA) or strictly prohibited (In China, debtequity swap is done through asset management pany). By swapping NPL for equity, banks can exercise more direct 濟(jì)南大學(xué)畢業(yè)論文 外文資料翻譯 4 control/supervision over enterprise management while the enterprise benefits from increased debt capacity. The risk to bank is excess exposure to a risky investment which may jeopardize deposit safety and bank capital, and demand scarce management time and resources. Debtequity swap represents nascent venture capital operation. Perhaps only one in 10 of these investments may succeed, but this should be sufficient to cover the risk of the other nine losing investment. Given existing low book values and the currently thin market that is likely to improve in the ing years, banks are prudent to allocate a small percentage of assets to enterprises they believe will generate significant profit at a l