Sub-participation

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Revision as of 16:25, 8 November 2013 by imported>Doug Williamson (Link with Loan page and categorise page.)
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An arrangement between two banks whereby in return for the sub-participant bank depositing with the lending bank the principal amount of a loan made by the latter, the lending bank will pass to the sub-participant bank its relevant share of any payments received from the borrower.

As a legal matter sub-participation is solely between the lending and sub-participant banks, giving the latter no contractual link with the borrower.