Intralinks for Financial Services—Syndicated Scoop is a newsletter providing a recap of the month’s top stories and insightful commentary related to the commercial and syndicated lending industry. Read on for a quick summary of this month’s Syndicated Scoop:
- Corporate loan traders shaving settlement times
- Bank lenders losing fees from scrapped mega-merger deals
- European Commission scrutinizing competition issues in loan syndication
This Month’s Syndicated Scoop…
Traders of corporate loans have shaved off more that 20 percent of the average time it takes to settle trades, according to the WSJ. These process gains were not implemented with a major technical disruption to the business but, instead, through a change in incentive that makes it difficult for traders to earn income if the settlement process took too long. Although the improvement hasn’t gotten settlement times as low as they theoretically could be with new technologies such as blockchain, it was just enough to raise the bar for justifying major technology spends in the process, according to WSJ.
Reuters reports that bank lenders are losing fees from a pattern of mega M&A deals that were scrapped due to U.S. antitrust rulings. President Trump’s administration is expected to be more lenient toward mega mergers, but scarce details on policy shifts and regulatory overhauls are keeping borrowers waiting for a few acquisition test cases to break the ice. Nonetheless, banks are continuing to extend loans to investment-grade corporates in hopes of securing business down the road as borrowers gain more confidence in the new political climate.
The European Commission (EC) has indicated that it will increase scrutiny on competition issues in syndicated lending. The EC’s 2017 Management Plan states concerns of excessively “close cooperation between [banks] in opaque or in-transparent settings, such as over-the-counter (OTC) activities, which are particularly vulnerable to anticompetitive conduct.” Lexology reports that the scrutiny would focus on “gathering information on market structure, dynamics between market participants and potential competition issues.”
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