The Cause of bank failure

a) LOAN SYNDICATION – Rhodes 1996:13) defines a syndicated credit as a loan in which two or more banks (the syndicate) contract with a borrower to provide (usually medium term) credit on common grounds governed by a common document. One member of the group is normally appointed to act as the managing or lead bank for the syndicate and it is the role of this bank to coordinate all negotiations, payments and administration between parties once the contract has been executed.it is a multi - bank transaction with each bank acting on a several basis, which means that each bank acts on its own without responsibility for the other banks in the syndicate. If a bank fails to honour its obligations as a member of a syndicate, the other syndicate banks have no legal obligation to satisfy them on that bank’s behalf. Syndicated loans are normally used to finance the purchase of capital assets or the acquisition of another business line or company. The syndicated credit market is one of the largest and most flexible sources of capital in the international market place. Loan syndication do happen in Zimbabwe but are not very common.
b) PROJECT LOANS – project loans has been used to describe all types of financing of projects, both with and without recourse. A financing of a particular economic unit in which a lender is satisfied to look initially to the cash flows and earnings of that economic unit as the source of funds from which a loan will be repaid and to the assets of the economic unit as collateral for the loan. Involve loans to finance major capital investment projects for which the cash flow arising from the project will either be the sole or main repayment source. Such projects are usually financed by major banks because of the large amounts involved and the need for full technical evaluation for example building a major dam or prospecting for oil. The loan is usually provided on a medium or long term basis. There are often other side benefits resulting from