Cash pool and Material adverse effect: Difference between pages

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A cash pool is a structure involving several related bank accounts whose balances have been aggregated for the purposes of optimising interest paid or received and improving liquidity management. A cash pool can be physical or notional.  
(MAE).  


A physical cash pool is a concentration account used for the purposes of managing liquidity. Surplus funds are physically concentrated into the account in order to maximise interest. Deficit accounts are covered by transfers from the cash pool in order to minimise overdraft interest.  
A clause in a loan agreement. 
 
It is intended as a 'catch-all' clause and states that if there is a change in the circumstances of the borrower that materially and adversely affects the borrower's ability to repay, then this will constitute an event of default.


A notional cash pool is a structure involving several related accounts whose balances have been aggregated for the purposes of optimising interest paid or received.  In other words a bank looks only at the total balance of the accounts in the notional pool when calculating interest, but there is no physical movement of funds.


== See also ==
== See also ==
* [[Aggregation]]
* [[Event of default]]
* [[Concentration account]]
* [[Loan agreement]]
* [[Consolidation]]
* [[Material adverse change]]
* [[Liquidity]]
* [[Adverse event]]
* [[Master account]]
* [[Notional pooling]]


[[Category:Bank_Lending]]
[[Category:Debt_Capital_Markets]]
[[Category:Legal_Documentation]]

Revision as of 07:35, 5 July 2014

(MAE).

A clause in a loan agreement.

It is intended as a 'catch-all' clause and states that if there is a change in the circumstances of the borrower that materially and adversely affects the borrower's ability to repay, then this will constitute an event of default.


See also

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