LOAN SYNDICATION PROCESS
I'm wondering if anyone can shed some light on the Loan Syndication Process? I know it is a complicated process, but in terms of the loan decision and terms, who are the main decision maker? does the loan officer themselves decide all the loan terms? or bank board/credit committee also get involved and have conversations with loan officer to make the decisions on the loan (say, loan spread or other terms)?
Looked it up on google, but most answers are quick opaque about it!
Thanks.
If you are talking about a high grade loan made by a corporate bank, then there will be a syndications desk which handles the syndication process. They will generally be under DCM. At a smaller bank, their title may be Loan Capital Markets or something like that. They help minimize syndication risk and coordinate with other banks. They are also responsible for structuring and pricing to some degree. Syndications is pretty boring.
Thanks, maestro_!
On a loan syndication desk now, it’s boring stuff. Tracking deals, help advice client on what pricing the loan could be done at and what structure. Then MD calls their contact @ other banks and get it done. Not particularly complex or hard, a lot of banks don’t even have a loan syndication team.
Thx, RichChigga! Could you shed some light on whether MD who signs for each loan deal needs to report to board about the deal?
I'm not sure what you mean by report to board. Essentially, there's a different side of credit team that help get us the credit approval. I have been on that side of the business as well, which is totally different from the syndication side. We typically receive a soft preapproval or verbal approval from the credit committee before we pitch the deal or go to market. If we win mandate on the deal, we're typically just selling this deal to our bank group. Which is essentially providing them with the same information on the deal that we received from the credit but put it together in a lender presentation. Internally, we are more worried about syndication strategy and the process which slightly more complex if it's a underwritten deal vs best effort.
Very useful insight, RichChigga! You mentioned about "receive soft preapproval or verbal approval from the credit committee before pitch the deal or go to market", in your experience who are usually in the credit committee? does the committee says anything about their suggested loan pricing/terms for a particular deal?
I have no idea what you mean by "board member". If you're referring to BOD of a public company, then no, they are not involved in the day to day operation of the bank. I can't speak to direct lender firms or credit funds. I'm specifically speaking to my experience in loan syndication in at BB. There's usually credit approvers which is usually a credit portfolio manager or their manager (depending on the size of the deal) and a risk manager (or his manager). The biggest I have seem is ~$5Bn, because I work on leveraged/ABL loans. The head of business approved the $5Bn deal. On the syndication side, we are less concern of the total credit exposure to the bank but rather the distribution risk.
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