Risk Management: Lendable Amount Control in Private Banking

This technical note aims to provide a practical approach to evaluating the amount of money that a Lender can grant to a Borrower based on an investment portfolio given as collateral. We describe the concept of Lendable Amount as a Risk Management tool; then we explain legal and operational considerations of collateral. Later, a hint is given on how to take the Lendable Amount approach further in detail and sophistication. The content of this work should be especially relevant for people involved in the private banking industry like private bankers, risk managers, consultants, investors, auditors, credit managers, regulators, members of credit committees, etc. We are also certain that this work will be of interest to people in the insurance and hedge fund industries, as well as for collateral agents.