Extraordinary Genius Chapter 822

Extraordinary Genius

Chapter 822 - Mortgage Loan

AMicrosoft shareholder wants to use his shares as collateral for a loan?Citibank will surely welcome it. Loan interest is one of the banks’ primarysource of income.

Ofcourse, the banks must consider the repayment ability of the other party, thevalue of the collaterals, etc.

Sharesare something that has risks. In the late 1980s, other than j.a.pan, the US wasone of the first countries that have a property crisis. During that time, theUS avoided the crisis because of the rise in its technology and war. But j.a.panwas not so lucky. j.a.pan's economic crisis will need at least 10 years torecover.

Duringthat period, all banks suffered losses from shares and property mortgage loans.Donald Trump was one of the people who owed banks a large amount and threatenedthe banks to lower their interests.

Somepeople just declared bankrupted. Their shares had become worthless, and thebanks could not recover a single cent.

Afterthat period, the banks imposed harsher regulations on their risk a.s.sessments.Therefore, Feng Yu's shares can only get a loan lower than the share's currentmarket value.

Feng Yualso knows that the loan amount will be lower than his shares' market value.But when Myers told Feng Yu about the loan amount, Feng Yu was not very happy.

"Myers, Iam using Microsoft shares as collateral for the loan. Don't you all know theprofitability of Microsoft? The value of the shares will surely rise this year.Why is there a risk of depreciation? The contracts signed between Microsoft andthose PC manufacturers is worth how much? Moreover, Microsoft's office softwareand servers' sales are doing so well now. The shares' value will surely go up!"Feng Yu frowned.

d.a.m.n! Howmany Microsoft shares am I using to get this loan? The market value of theseshares is worth at least 1.5 billion USD, and even 1.2 billion loan isconsidered too little. You are telling me that you can only give me a 700million USD loan?

You aretelling me that Microsoft's shares have the risk of depreciating 50% within 3years? What bulls.h.i.t?!

"Mr.Feng, please calm down. Share prices are volatile and have fluctuations. Ourrisk a.s.sessment might be harsher, but I hope you can understand." Myersreplied.

"I don'tunderstand. I only want a loan of 1.2 billion USD with these shares. Is it alot? The value of these shares is at least 1.5 million USD! You all will alsobe charging interest for this. Is the loan amount huge? Next year, the value ofthese shares might double. Your risk a.s.sessment team cannot even see it?"

1.5billion worth of shares can only get a 700 million USD loan? This is tooridiculous! If Citibank insists on this amount, Feng Yu will get a loan fromother banks. But he is Chinese and could not enjoy the super low-interest ratesgiven out in j.a.pan. If not, he will get a loan from the j.a.panese banks!

"I'msorry, Mr. Feng. These are the regulations in our bank now. If you want toincrease the loan amount, the value of your collaterals must also increase."Myers also want to issue a higher amount of loan to Feng Yu. But Feng Yu wasonly using a portion of his Microsoft shares as collaterals for the loan. If hecan make Feng Yu use all of his shares to get the loan, the proportion of theloan amount will not be so low!

Myers'sperformance is gauged by the loan amount issued out. The more loans he gaveout, the higher his bonuses were.

Myersthought by giving such a low amount, and after much persuasions, Feng Yu willsurely increase the number of Microsoft shares, and he will increase the loanamount slightly higher.

But whatMyers did not expect was Feng Yu stood up suddenly and walk off.

"Mr.Feng, our Citibank's loan conditions are the same as other banks. You will notget better offers in any New York banks." Myers shouted. "If you are willing toincrease the number of shares, I will increase the loan amount."

Feng Yudid not say a word and walked out of Myers's office.

Myerspanicked. Feng Yu had left without hesitation!

WhatMyers said was partially true. All the banks in New York have a strictevaluation of shares used in loans. The proportion of loans and shares is verylow.

But FengYu was not using any company's shares. He is using Microsoft shares, thefastest-growing software company's shares sought after by all investors. Theproportion will not be so low!

Myers watchedFeng Yu left and immediately called a few banks' top management staff, who wereclose to him. Although they were compet.i.tors, sometimes they will worktogether.

Forexample, now. Myers successfully convinced the other banks to cooperate tolower Feng Yu's personal loan amount. He wants to teach this Chinese man alesson. Of course, the condition he offered to the other banks was to give FengYu the loan together if he agrees to the amount.

Thosebankers agreed, but Myers was not sure if they would keep to their words. Thosebankers were secretly hoping Feng Yu will contact them, but to their surprise,Feng Yu did not contact anyone of them.

All thebanks panicked. They quickly contact Feng Yu and their roles switched. Thebankers are willing to increase the loan proportion, and they know thehigher-ups will agree. No one believes that Microsoft shares will depreciate!

But whenthe bankers contacted Feng Yu, they were rejected even though the loan amountwas increased.

Myersalso could not sit still. He called Feng Yu and told him that he had seen theamount wrongly. The loan amount Feng Yu can get from using his Microsoft sharesis not that low. The higher-ups in Citibank had agreed to increase the loanamount to 1.2 billion USD.

Feng Yusneered. "They agree to the amount? But I do not want to get the loan from yourbank now. Also, Mr. Myers, I will speak to your bank's Chairman about this. Ithink you will be in trouble."

Myers wa.s.shocked. He realized that it was a mistake to treat Feng Yu like any other person.If the Chairman knows about this, the board of directors will surely fire him.He will not be able to get such a high-paying job elsewhere.

Myers isthe only one in the top management that did not receive any incentive shares.He had wanted to use Feng Yu's loan to increase his performance and get someincentive shares at the end of the year. But now, not only he will not get anyincentive shares, he might even lose his job!

"Mr.Feng, I think there are some misunderstandings between us. I would like to explainto you personally."

"No need.I am not free for your explanations." Feng Yu had a smile on his face.

ThisMyers really thought Citibank is powerful? There are so many banks in thisworld. If Citibank refuses to give me a loan, you think the other banks will dothe same too?

Feng Yuhad already gotten a loan from HSBC. It is a low-interest loan of 1 billionUSD. The Microsoft shares used as loan collateral is only worth 1.1 billionUSD. This was a vast difference from what Citibank offered.

Ofcourse, the loan got approved was also not because of Microsoft shares. It wasalso because Li Zekai and Fu Guangzheng were Feng Yu's guarantors. Feng Yu willcontinue to use all his Microsoft shares to get loans and invest everything inthe US stock market.

As for Myers, that's a lesson he will never forget for the rest of his life!