The Different Requirements of Bank & Market Valuations

Priya Kapur is a Valuer within Hilco Valuations Services Europe, based in the Birmingham office. Prior to joining Hilco Valuation Services Europe in 2019, Priya had previously worked in many roles across HSBC Bank UK, with her last role being within HSBC Equipment Finance for 2 years.

Below is a brief article, by Priya, describing Bank vs Market Valuations and how both are viewed from her experience as a valuer for Hilco compared to her previous role at HSBC.


Valuations play a key role in business management and can determine the economic value of a company as a whole or its individual assets – tangible or intangible! The outcome of valuations can differ and is dependent on several factors including which valuation method is used, what type of sector or industry the asset falls under and the current market conditions.

Market Valuation is essentially the estimated price that an asset will trade for if it were to go on sale on the current market. Whilst a Market Valuation for a bank is no different, Bank Valuations must look at the ability to realise the value in a determined time frame and account for the effect of depreciation across the lifetime of the finance arrangement.


Market Valuations are a snapshot of the current value of any particular asset within its sector and common marketplace. These valuations are highly personalised to each individual item based on its age and condition with valuations being made based on comparisons of completed purchases within a relatively close time frame.

These valuations are, in essence, a guide as to a fair settlement between a willing buyer and a willing seller. The accuracy of this information is vital to both parties in producing an equitable outcome. For this type of transaction, it is therefore critical for in-person observations to be made, as any defect in a piece of equipment that goes un-noticed presale could prove to be a costly repair in the long run.

Market Valuations, similarly to Bank Valuations, take consideration of the effects of depreciation. Its value is assumed based on the fact a buyer is looking to purchase it now and in this current marketplace. Market value will also take into consideration a 90 – 120 day selling period on an ex-situ basis. That being said, it is also important to note that market volatility is more or less dependant on the sector of operation, supply & demand and many other factors. Certain assets in certain markets may hold a comparable value for years at a time, others may rise and fall with market changes and fluctuation.

Market Valuations need not always be undertaken for the purposes of a sale, indeed it is an important part of financial reporting that accurate assessments of inventory are kept, but the underlying market value of the asset is always that, what if I were to sell this today? For this reason, the only element of risk management analysis that could be done is in the hands of the buyer, risk is not factored into a market valuation.


Bank Valuations can be thought of as assessment of risk conducted to account for various mitigating factors which can affect market value across an asset’s lifecycle including age related milage, obsolescence or the natural ebb and flow of market conditions. Equally, Bank Valuations are likely to fall less dramatically if revalued at later date, hence many Banks will adopt the approach of valuing assets annually to monitor the market with Bank valuations being for risk mitigation. No bank would ever wish to bet on the market value of a particular item increasing or decreasing over a short period of time, they would ultimately prefer full repayment of a loan, with timely monthly repayments being made.

Due to the necessity for quick capital recovery in the event of default, bank valuations are likely to require in person inspection of assets for lending purposes, particularly on those items that are deemed ‘big ticket items’. Inspecting an asset holds many benefits; these being to verify its actual existence, visually inspect the condition of the asset, and to confirm it is currently being utilised. All these points can lead to ensuring our ex-situ values are as accurate as possible.

Ultimately, banks will take a look at a company’s background in great detail prior to valuing an asset, also calculating its risk, and the current market factors of the sectors that they work in. It is these details which are of greatest importance to the banks as this dictates the likelihood of payments being made and the loan being repaid in full.

The valuation of the asset is important only in the sense that it provides confidence to the bank that their investment is protected. Valuations for these purposes must be cautious, imagining the “worse case scenario”. A bank however may solely only look at the values associated within a valuation report, but will need to appreciate a number of external valuation considerations which may affect this value at disposal. These external factors include; location of the asset – both geographically and within the facility, associated removal costs – will this affect any offers made?, Is the asset likely to be sold in isolation or as part of a group of assets, what is the machines current usage, and could it be running for a 24 hour period, how has the machine been maintained within the company, what/any evidence to support its general upkeep and does the footprint of the facility create additional stress to the physical asset in question. These and many other factors will be considered in a valuation provided and clearly detailed in its caveats for both the bank and the valuation company to refer back to.


Valuations as a whole, are important when it comes to a company’s assets, and particularly when the asset appears under finance. They make up part of a company’s book and can hold a large proportion of value over a lengthy period. Given the current climate, repeat or new valuations are very important to obtain and ultimately will give a company or a finance provider line-of-sight of their assets and their worth.

We at Hilco Valuation Services Europe pride ourselves on such valuation work, often provide recommendations or opinions on assets and provide commentary on any offers received. Our passion for valuation work has continued to grow, given the growth within the valuation team over the past few years. We continue to monitor trends in the market and can be here to provide advice on any future work you may have.

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Priya Ross

Associate Director

Machinery & Business Assets

Birmingham Office

+44 (0) 7851 721381

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