Restriction on Collateral Agreement Portion  

Definition

A business condition attached to a collateral agreement portion. Restrictions on portions can be used to control the usage of portions in determining scope of collateral agreement. Whether a condition is restrictive can be defined in the Customizing for portion restrictions.

 

Use

You may have various reasons for assigning portion restrictions. Some example scenarios are:

●     You need to distinguish between assignment of receivables belonging to own bank and an external bank.

●     For external (prior) charge such as non recurring loan undertaking where you may want to restrict assignment only to receivables of the particular external bank.

●     A syndicated loan agreement where you want to specify that only receivables of own bank can be assigned.

●     A non-recurring loan undertaking where you want to exclude the value of the relevant portion on which the charge exists.

 

Structure

You can define the required portion restrictions in the Implementation Guide (IMG) under Collateral Agreement ® Special Arrangements ®Define Portion Restrictions. Portion restrictions can be assigned independently or by using special arrangements on collateral agreements.

It is possible to delete a portion restriction attached to a collateral agreement. If however, you want to delete a portion restriction attached to a special arrangement, you will have to delete the special arrangement as well.

 

You specify the following attributes in the Customizing for portion restrictions:

·        Description of the portion restriction

·        Blocking category to specify they type of links possible using portion restriction. The standard system provides the following values:

○     Manual links - Restriction on the scope of portion. Assignment to receivables must be maintained manually.

○     Automatic links- No restriction on portion. Assignment to receivables can be generated automatically or maintained manually.

○     No new links - Portion blocked from further assignments to receivables.

·        Receivable type that determines if the portion can be assigned or restricted from being assigned to receivables of own and external banks. The standard system provides the following values:

○     Own bank - Portion can be assigned to receivables of the own bank only

○     Other - Portion can be assigned only to the receivables of external banks. This means that the portion is restricted from being assigned to receivables of own bank.

○     Own and Other - No restrictions as the portion can be assigned to receivables of own as well as external banks.

The declaration of purpose for a collateral agreement is normally valid for all portions. A portion restriction overrules the declaration of purpose and the other Customizing attributes for a collateral agreement (such as the organizational role).

 

Consider the following examples:

Portion Restriction	Blocking Category	Receivable Type	Influence on Collateral Agreement Portion
Third-party pool bank	Automatic links	Own & Other	No restriction on portion
Assignment to third-party	No New Links	Other	Blocked for usage
Assignment by third-party	Automatic Links	Other	Portion available for use only for external banks. Portion blocked for use by own bank
Give Assignment of Restitution Claims	No New Links		Blocked for usage

 

Integration

Interpreting Portion Restrictions in Calculations:

The Customizing attributes (blocking category and receivable type) of a portion restriction determine how the system calculates collateral right for a collateral agreement. The possible calculation sequences are explained as follows:

Blocking Category	Receivable Type	Portion Value Considered for Collateral Right
Auto Links or Manual Links	Other	Complete amount of the portion
No New Links	Other	Complete amount of the portion
Auto Links or Manual Links or No New Links	Own	Minimum [(portion amount) (sum of receivable risks)]
No New Links (where some receivables are already assigned to the portion)	Other	Minimum [(portion amount) (sum of receivable risks)]