Rivals ask: is StanChart risking it all on syndicated loans?
SC expands as cashless competitors retreat; Tough markets mean deals stuck on the books
Rivals are speculating that Standard Chartered’s activities in the Asia-Pacific syndicated loans business over the past 18 months might land the bank in trouble if economic conditions were to worsen. The bank has stepped up its underwriting business relative to the competition as rivals too damaged by the financial crisis have had to scale back.
The firm is now the top-ranked international bookrunner of syndicated loans in Asia (excluding Japan and Australia). Staying open for business in the Asia loans market has meant launching loans for clients in difficult conditions, and several of the region’s more prominent debt bankers say – without wanting to be quoted on the record – that Standard Chartered has ended up keeping much larger quantities of those loans on its books than might be prudent.
If economic conditions worsen, the argument runs, the bank could end up losing close to the full amount on these loans where the risk would in normal markets have been syndicated out among many institutions.
"One firm told me that they thought that Standard Chartered was the only bank with the word ‘underwriting’ still in its dictionary"
Philip Cracknell, Standard Chartered
Philip Cracknell, global head, syndications, at Standard Chartered, rebuts the notion that the firm is playing a risky game and suggests that these rivals are criticizing a sound business that they are for now no longer able to enjoy themselves.