Rufus Folorunso Akinyooye - St Clements University

TRANSFER RISK- is the possibility that an asset cannot be serviced in the currency of payment
because the obligor country lacks the necessary foreign exchange or has put restraints on its
availability.
CREDIT RISK MITIGANTS (CRM)- are collaterals, guarantees, and credit derivatives.
SPECIALISED LENDING- is the financing of individual projects where the repayment is
highly dependent on the performance of the underlying pool or collateral.
SECURITIZATION-is the transfer of ownership and/or risks associated with the credit
exposures of a bank to other parties.
BILATERAL NETTING- is a legally enforceable arrangement between a bank and a counter
party that creates a single legal obligation covering all included individual contracts. In effect a
banks obligation, in the event of the default or insolvency of one of the parties, would be the
net sum of all positive and negative fair values of contracts included in the bilateral netting
arrangement.
CREDIT DERIVATIVE-is a contract, which transfers credit risk from a protection buyer to a
credit protection seller. Credit derivative can take many forms, such as credit default options,
credit limited notes and total return swaps
DERIVATIVE-is a financial contract whose value is derived from the performance of assets,
interest rates, currency exchange rates, or indexes Derivatives transactions include a wide
assortment of financial contracts including structured debt obligations and deposits, swaps,
futures, options, caps, floors, collars, forwards and various combinations thereof.
EXHANGE-TRADED DERIVATIVE CONTRACTS- are standardized derivative contracts that
are transacted on an organized exchange.
GROSS NEGATIVE FAIR VALUE.-is the sum total of the fair values of contracts where the
bank owes money to its counter parties, without taking into netting. This represents the