Banking Structures

Abstract

Much the most common type of loan found in this market is one made by a single bank and it is in many ways the most satisfactory arrangement for both parties. Provided the amount involved is not in excess of the bank’s capacity and willingness to lend to its customer then it would normally have no reason to wish to share the business and, in the process, risk introducing a potentially predatory competitor bank to that customer. Indeed, a bank which was approaching its lending limit with a particular customer might deliberately seek to share the new loan with a friendly bank, rather than risk letting a real rival have an opportunity in the future.