What is bank-specific collateral markdown in SAP FS-CMS - Collateral Management System?

SAP Term: bank-specific collateral markdown

• Component: FS-CMS

• Component Name: Collateral Management System

• Description: The risk discount used when evaluating an object. It focuses on the quick and lasting realization of the object value. Discount on the collateral is pre-defined for each object type, in line with the credit guidelines of the bank. But this discount can be changed in exceptional cases.

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• Key Concepts: 
  Bank-specific collateral markdown is a feature of the SAP FS-CMS Collateral Management System. It allows banks to set their own markdown rates for collateral that is used as security for loans. This allows banks to adjust the value of the collateral to reflect their own risk assessment and to ensure that they are adequately compensated for any losses that may occur. 
  
  How to use it: 
  The bank-specific collateral markdown feature can be used by banks when setting up a loan agreement. The bank can set the markdown rate for the collateral that is being used as security for the loan. This rate will be applied to the value of the collateral when calculating the amount of money that is owed by the borrower. 
  
  Tips & Tricks: 
  When setting up a loan agreement, it is important to consider the bank-specific collateral markdown rate carefully. The rate should be set at a level that adequately compensates the bank for any potential losses that may occur due to default on the loan. 
  
  Related Information: 
  The SAP FS-CMS Collateral Management System also includes features such as automated collateral monitoring, automated margin calls, and automated collateral liquidation. These features can help banks manage their risk more effectively and ensure that they are adequately compensated for any losses that may occur due to default on a loan.