Free Collateral Value 

Use

This function determines the free collateral value that is available for a collateral agreement after the distribution of collateral value to the receivables and collateral agreements assigned to the collateral agreement. You can use the value of free collateral for collateralizing existing or even new receivables.

 

Free collateral value has the following features:

·        Calculated for each portion of a collateral agreement. Rollover of free collateral value amongst portions is not possible.

·        Calculated for the maximum and current risk.

SAP recommends that free collateral value for maximum risk be considered for all practical calculations.

·        Determined using the intermediary calculation of maximal collateral value.

Maximal collateral value will not be calculated in scenarios where free collateral value is not calculated.

·        Free collateral value is not calculated in the following scenarios:

¡        Indemnity bonds where the liability of the guarantee is fixed.

¡        Collateral agreement portions that are restricted by portion restrictions such as non-recurring loan undertaking and assingment of restitution claims.

¡        Backed-up collateral agreements as the back-up collateral agreement only provides the collateral value required to collateralize already assigned receivables.

 

The system considers the following parameters in the calculation of the value for free collateral:

·        Highest lending limit of the assigned collateral objects.

·        Prior charges

·        Special markdown

·        Assessment value

·        Collateral value distributed to receivables.

·        Collateral value distributed to relations.

Other parameters that indirectly influence the free collateral value calculation include the ranking ratio of the collateral agreement portions, value of portions and the priority of the assigned receivables.

 

Activities

The system determines the value of free collateral using the following equation:

Free collateral value for a portion (current risk) = apportioned maximal collateral value for the portion - distributed collateral value from the portion (current risk)   Where the maximal collateral value is distributed to the portions using the normal distribution rules (that are defined using portion ranking ratio, portion value and its collateral value).