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e LEARNING

Problem LoansRECOGNIZE AND RESPOND TO DISTRESSED COMMERCIAL LOANS

COURSE OVERVIEW &

BENEFITS

Banks take a risk every time they make a loan. When a borrower becomes inancially

distressed, the loan can become a problem loan. To minimize the negative impact

of problem loans, lenders must be able to spot early warning signs of deteriorating

credit and proactively work to reduce exposure to undue risk.

Problem Loans (PL) teaches lenders how to recognize and respond to deteriorating

credit conditions. It reinforces the organization’s risk culture broadly while providing

proven techniques for mitigating risks on a loan-by-loan basis.

The course begins by exploring seven different categories of early warning signs. It

then examines the role that covenants, collateral and guarantees play in helping the

inancial institution safeguard repayment. Participants also learn a four-step process

to follow when it becomes clear the loan will need to be restructured, including

strategies to determine the likelihood of the company’s short-term and long-term

viability.

To complete their studies, participants apply what they’ve learned to an interactive

case study. They’re also provided with the Early Warning Signs checklist, a robust

job aid they can use post-training to help them actively monitor loans for signs of

distress.

LEARNING OBJECTIVE

Learn to recognize and respond to distressed loans by monitoring

covenants, detecting early warning signs, taking corrective action

and determining next steps when default is unavoidable.

COMPETENCIES GAINED

Participants will be able to:

• Spot early warning signs of deteriorating credit and respond to them before the

borrower defaults

• Develop an action plan for conducting dificult conversations with clients

following a covenant breach

• Understand the overall steps to take when debt must be restructured

• Apply the concepts learned to their day-to-day loan monitoring activities, thus

improving and protecting portfolio quality

TARGET AUDIENCE

PL is suitable for anyone involved in the commercial lending process, including credit

analysts, underwriters and relationship managers, and anyone involved in the second

line of defense, such as loan reviewers and auditors. It is also appropriate for business

analysts who gather and analyze data at the portfolio level.

DURATION

8 - 10 hours

This course is on the path to the Moody’s Certificate in Commercial Credit (CICC).

C I C C

Ari Lehavi

EXECUTIVE DIRECTOR, MOODY’S ANALYTICS

MOODY’S ANALYTICS CERTIFIES

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Problem

Loans

Profitability and Credit

Risk

Certification Exam

Commercial Lending

Contact us for more

information at:

elearning@moodys.com

Course Modules:

1 Deteriorating Credit

2 Collateral, Guarantees

and Covenants

3 Restructuring Process

4 Problem Loans Case

Study Exercise