Determining Collateral Value Available for Distribution (SAP Library

Determining Collateral Value Available for Distribution

Use

This function calculates the value that is distributed to receivables and other collateral agreements assigned to collateral agreements. Collateral value is calculated separately as there is no single value from collateral agreements that can be used directly for collateralization.

Features

Collateral value is characterized by the following features:

· Is calculated differently for the different collateral agreement business scenarios. This is because the value of a collateral agreements can be influenced by various attributes such as the prior charges, guarantee scenarios or the special markdowns.

· Is calculated according to the current risk and the maximum risk for the receivables.

● Uses the following parameters in the calculation:

¡ Lending limit for each collateral agreement with reference to the collateral objects

¡ Sum of all the prior charges for each collateral agreement with reference to the collateral objects

¡ Special markdowns for the collateral agreements

● Is characterized by additional intermediary calculations for collateral agreement relationships:

Intermediary Calculations for Collateral Agreement Relationships

Activities

The system uses one of the following equations for calculating collateral value:

Business scenario	Collateral value is equal to:
Any normal collateral agreement	Minimum (sum of lending limits of collateral object) - (sum of prior charges) - (special markdown)] AND [Min (assessment value of collateral agreement) (sum of receivables)]
Prior charges	Minimum (lending limit – prior charges – special discount) AND (assessment value for prior charges and sum of receivables)
Back-up collateral agreement	Minimum (lending limit – prior charges – special discount) AND (assessment amount of the back-up collateral agreement)
Backed-up collateral agreement	Minimum (sum of allocated available collateral value of the backup collateral agreements + minimum [(lending limit – prior charges – special discount) AND (assessment value of the main backed-up collateral agreement)]
Pool agreement	Sum of collateral values (maximum risk/current risk) of all collateral agreements assigned to the pool If the sum of the receivables is greater than the sum of the collateral values of all the collateral agreements, the collateral value of the pool is equal to amount of its collateral right.

Example

The following example illustrates the calculation of collateral value:

Consider the following example where collateral agreement B collateralizes receivables 2 and 3 using the collateral objects1 and 2

Collateral object 1:

Lending limit = 360

Prior charges = 150

Maximal value = 800 (nominal value of agreement B)

Collateral object 2:

Lending limit = 540

Prior charges = 100

Maximal value = 800 (nominal value of agreement B)

Collateral value (collateral object 1) = Minimum (360 – 150 – 0) and 800 = Min (210) and (800) = 210

Collateral value (collateral object 2) = Minimum (540 – 100 – 0) and 800 = Min (440) and (800) = 440