DEFINITION
Sub-Participation

"Sub-participation": An arrangement between two banks whereby in return for the sub-participant bank depositing with the lending bank the principal amount of a loan made by the latter, the lending bank will pass to the sub-participant bank its relevant share of any payments received from the borrower. As a legal matter sub-participation is solely between the lending and sub-participant banks, giving the latter no contractual link with the borrower. Also known as a participation.
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