All change in Europe’s mid-market
As direct lending funds continue their advance, certain banks are also making waves in mid-market lending.
In the post-Brexit vote uncertainty plaguing the UK, it is no surprise that mid-market bank lenders are being more cautious.
Recent research from Alix Partners Corporate Finance reveals that the volume of lending by banks to mid-market borrowers in the UK was down 3% last year, following a 7% slump in 2016 immediately after the vote.
But the trend is not uniform. While market leaders HSBC and RBS have seen substantial falls in lending activity (down 12% and 30% respectively), Lloyds and Santander are making gains. Lloyds saw deal count rise 25% to 40, while Santander’s tally was up 29% to 29. In terms of the number of deals, Lloyds is now only seven behind the long-dominant RBS.
Lloyds and Santander have both targeted small and medium-sized enterprise lending with vigour in recent years, and the numbers seem to show that this strategy is paying off. It is interesting that both banks, one with a very domestic SME lending strategy and the other with a global SME approach, have both made such big inroads into the business of the incumbents.
Bank lenders face a growing threat in the mid-market, not just from each other but from the non-bank lenders that the regulators have been so keen to encourage since the financial crisis.