CONSORTIUM LOANING

What is consortium?

Its a Latin word

Partnership

Association

Society

CONSORTIUM

Meaning

A group made up of two or more individuals,

companies or governments that work together
toward achieving a chosen objective.
Each entity within the consortium is only
responsible to the group in respect to the
obligations that are set out in the consortium's
contract.
Every entity under the consortium remains
independent inhis normal business operations
and has no say over another member's
operations that are not related to the
consortium.

Consortium

Non- for profit

motive Consortium

Profit
motive Consortium

Non- for Profit Motive

Consortium

It is pooling the resources of the

members (ex. colleges and the
university) to share human and material
assets in order to complement each
other.
It is working with Mutual Benefit of the
members.

Example:

Five colleges Inc.

Oldest consortia in USA.
Amherst College,
Hampshire College, Mount
Holyoke College, Smith
College, and the University
of Massachusetts at
Amherst.

Profit Motive Consortium

Bank consortium loan refers to the

loan which the banking group
consisting of a certain number of
banks or other financial institutions
grants to the borrower, and the
contract signed is the Bank
Consortium Loan Contract.

Example:

Airbus Industrie (Airbus), 1970.

Owned by EADS.
A merger of

Arospatiale-Matra, France.
Daimler-Chrysler Aerospace, Germany.
Construcciones Aeronuticas, Spain.

Profit motive
Consortium

Direct Bank
Consortium

Indirect Bank
Consortium

Direct Bank Consortium

Bank consortium loan

The borrower directly negotiates with the
bank consortium consisting of all member
banks
Jointly sign the same Loan Contract, all
member banks grant loans to the borrower
according to the conditions stipulated in
Loan Contract and their respective loan
limits promised in advance.
Agent bank is responsible for management
and recovery of loans.

Advantages:

both parties have intrinsic power and

conditions for cooperation.
Its a kind of multilateral loan,
effectively solves the problem of
excessive competition.
Dispersion of risk among the members.

Indirect Bank Consortium

Refers to the bank consortium loan

business.
Leading bank directly grants loan to the
borrower.
Splits the stocking credit assets by share
or repayment time, and transfers partial
credit assets split to the assignee.
Assignor and the assignee form a bank
consortium to manage loans.

THANK YOU