What is WCG and ABF in bank terminology?
submitted by chandu

william sherman

WCG stands for Weighted Credit Grade,. That's a classification system used by banks to assess is a borrower is creditworthy. They use a few different financial metrics to get a picture of whether or not the borrower is good for the money.

ABF is Asset Backed Funding. That's a type of financing that requires the borrower to give some type of collateral.

Banks uses ABF and WCG to manage their risk. They want to make loans, but they only want to make them to people who will pay them back. These are two methods to ensure that.

phillip_the_tank

WCG means Weighted Credit Grade. That's how banks rate how risky a borrower is, based on their financial health.

ABF is short for Asset Backed Funding, which is when a bank gets money by using assets like loans or receivables as security. So, both are important terms used in banking to manage loans and risk.

Ryan

Asset Backed Funding might need some clarification. That's a loan arrangement where a company borrows money by using its assets, like inventory, accounts receivable, or property.

It's like what happens at a pawn shop, but it sounds fancier. At a pawn shop you hock grandpa's old fishing rod and power tools in order to get a loan. With a business doing ABF, they essentially hock their assets, like a warehouse full of car parts or macaroni. That's their collateral. If they don't make good on the loan, there goes the macaroni.

ABF is convenient for the company getting a loan, because they already have those assets sitting around. However, they need to be sure they can pay off that loan, because they stand to lose their business with the wrong move.