Loan portfolio sales—legal documentation
Loan portfolio sales—legal documentation

The following Banking & Finance guidance note provides comprehensive and up to date legal information covering:

  • Loan portfolio sales—legal documentation
  • Key documents used in portfolio sales
  • Why is LMA form documentation not used?
  • Confidentiality agreements
  • Sale and purchase agreement
  • Disclosure letter
  • Sub-participation agreement
  • Hedging transfer documentation
  • Loan and equity transfer documentation
  • Transitional services agreement

This Practice Note provides an overview of the main legal documentation which may be used to conclude the disposal of a loan portfolio and suggests typical negotiating positions taken by sellers and buyers. For an introduction to loan portfolio sales and an example of the process these often follow, see Practice Note: Loan portfolio sales—an introduction. For an explanation of some of the key issues which can arise on loan portfolio sales, see Practice Note: Loan portfolio sales—key issues.

The market's approach to legal documentation for loan portfolio sales is not completely uniform, but there are some common elements which are explored in this Practice Note.

Key documents used in portfolio sales

The main documents which are commonly used in loan portfolio sales are the following:

  1. Confidentiality agreements

  2. Sale and purchase agreement

  3. Disclosure letter

  4. Sub-participation agreement

  5. Hedging transfer documentation

  6. Loan and equity transfer documentation

  7. Transitional services agreement

Why is LMA form documentation not used?

Market practice in the area of loan portfolio sales is evolving, but these transactions do not typically use the suite of recommended form of documents produced by the Loan Market Association (LMA) which has been developed and is the market standard documentation for individual trades (the LMA form). For more information see Practice Note: Overview of the key documentation in a typical secondary debt