Structured finance

In structured finance (English structured finance ) is understood in the banking practice, the composition of financing of several elements. Structured finance differ from pure lending by complex economic, legal and tax, if applicable also actual requirements that have to be considered in the design of the financing. Therefore, structured financings require individually adapted solutions to the financing case. Due to the increased technical requirements consist of structured finance in the banks regularly special units, which are usually associated with investment banking.

Economically, it will usually act in structured finance to cash - flow-based financing and to those in which the investor does not want to be exposed with all its assets to financing risk. As banks respond ultimately a commercial risks approximate risk of cash flow based financing beyond the usual lender risk beyond, the need for information and surveillance ( monitoring) of the borrower or financing the object and the desire for influence and action options is significantly larger than in the conventional lending, which refers to the debt service capacity of the borrower, ie its credit rating and not on the sustainability of the finance object underlying business case. In structured finance therefore granted for repayment loans are not the ( funded ) assets and their potential values ​​busting at the forefront of lending decisions, but the expected future cash flows from which interest and principal must be guaranteed. This is reflected in the loan documentation, often in such cases from a variety of large documents.

Typical examples of structured financings

• Acquisition financing,
• Project financing and
• Securitization transactions.