SECURING BANK CLAIMS WITH BILLS OF EXCHANGE AND MORTGAGES ON REAL ESTATE

Ensuring good, proper and sufficient security for bank claims is a responsible task. The illiquidity and financial indiscipline of debtors require creditors to seek the safest possible security instruments. In every credit transaction, the bank assumes credit risk, which is one of the most important risks in banking operations. The diploma thesis will present two forms of security – ** the bill of exchange and the mortgage.** A bill of exchange is a negotiable instrument that is used on various occasions for different types of security.

Problem

Ensuring good, proper and sufficient security for bank claims is a responsible task. The illiquidity and financial indiscipline of debtors require creditors to seek the safest possible security instruments. In every credit transaction, the bank assumes credit risk, which is one of the most important risks in banking operations. It is not possible to avoid risk entirely, but the bank must pursue a policy that minimises risk as much as possible. The latter is achieved through careful analysis of all available accounting and other data about the company, whilst ensuring appropriate security for each bank investment.

Solution and Method

The diploma thesis will present two forms of security – the bill of exchange and the mortgage. A bill of exchange is a negotiable instrument that is used on various occasions for different types of security. A bill of exchange is made out for a specific monetary amount. The diploma thesis will present its constituent parts, the method of transfer of the creditor's rights and the method of enforcing these rights, as regulated by the provisions of bill of exchange law.

A pledge on real estate is called a mortgage and is registered in the land register. Real estate may be encumbered with a pledge for the security of a claim in favour of the creditor.