The banks learn how to say no

Three years of declining margins have lenders scrambling for yield. They are turning to higher risk areas such as project finance and emerging markets. But the curse of high liquidity soon tracks them down and ruins the rates. Only by aggressive portfolio management and offering additional services can banks make money. Nigel Pavey reports.

Top 10 Euromarket loan arrangers 1996
Rank Bank Country Amount ($m) No. of issues Share (%)
1 BZW UK 31,819.30 114 8.89
2 Deutsche Morgan Grenfell Germany 25,773.11 102 7.20
3 NatWest Markets UK 24,980.45 117 6.98
4 Chase Manhattan Bank NA US 24,587.45 138 6.87
5 Union Bank of Switzerland Switzerland 17,862.86 113 4.99
6 ABN Amro Netherlands 16.813.72 108 4.70
7 JP Morgan & Co US 15,945.59 56 4.46
8 Citicorp US 15,467.47 107 4.32
9 CSFB/Credit Suisse Switzerland 12,583.83 51 3.52
10 Bank of America US 12,091.59 57 3.38
Source: Capital DATA Loanware

The three-year boom in syndicated lending is proving more enduring that many market practitioners had anticipated. Despite margins hitting record lows after three years of decline, spectacular pricing gains still are being achieved by many borrowers. Intense competition among arrangers and high levels of liquidity among lenders has created unusually advantageous conditions for borrowers.

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