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8 FOCUS PSI Journal 4/2016 www.psi-network.de CORPORATE LOANS BANKS ASK FOR MORE TRANSPARENCY Growth-oriented companies can as a rule only invest with the help of banks. When negotiating loans, however, decision-makers are facing stricter standards in the form of subsidiary agreements (covenants) included in the loan agreements. Although these covenants demand more transparency for the banks, they can also bring advantages to well-run companies. When loan commitments are extended or expanded, decision-makers are increasingly noticing that covenants are being defined in the loan agreements with banks which, for example, make it a condition that the company maintains a spe- cific level of profitability, regulate shareholder withdrawals, or makes funding dependent on supplementary consulting. By including these additional clauses in the loan agreements, banks want to obligate the debtor to maintain certain benchmarks or submit certain information at certain times without being asked. If the company or its management does not meet this obligation, then the credit institutes reserve the right to put sanctions in place. These sanctions can vary greatly: conceiv-

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