Loans to Corporations not being counted

[gbveltman]

Hello,

Are we sure that Loans to Corporations are being counted in bank's balance sheet and income statement? My idea was to set up an in-house bank for my Group, with subsidiaries getting loans from bank, so the effective borrowing rate is the cost of deposits, placing bank in a low-tax city so this transfers income to bank in this low-tax jurisdiction.

However, I've noticed that loans to corporations are not counted in the balance sheet. I started a new game and left bank with only a $5,290,000 loan to one of my subsidiaries. My bank shows no loans to customers on balance sheet.

[David]

Here is how it works internally:
When the bank is going to issue a new loan to a corporation, it will first demand loan repayments from local companies and customers and lend the money collected from the loan repayments to the corporation. Under this mechanism, the amount of outstanding loans remain the same.

[gbveltman]

OK, got it. But I've got a savegame where the bank has only 1 loan outstanding, to a corporation, yet in balance sheet there is zero loans to customers. Shouldnt balance sheet sum everything up?

Also, if bank has enough deposits/capital to extend loan without resorting to demanding payment from local customers/corporations, why isnt this done? Is repayment always forced?

[gbveltman]

Hello? I’d be interested to know if this can be done.

[David]

Also, if bank has enough deposits/capital to extend loan without resorting to demanding payment from local customers/corporations, why isnt this done? Is repayment always forced?

It is implemented this way for the sake of gameplay balance. Otherwise the player can disrupt a rival corporation's bank on purpose by taking out loans and repaying them soon afterwards and doing this repeatedly with different loan sizes, causing great fluctuations in the bank's various financial ratios and bringing unfair management challenges to the bank.

Imagine what will happen if the total loan size of local customers/corporations spikes suddenly, then is reduced substantially without any signs of warning - your bank will have to keep paying customer deposit interests and yet get relatively low loan interest income.