Syndicated loan

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Syndicated (or Metakredit , syndicated credit ; English syndicated loan ) is Kreditwesen the granting of a single loan by at least two banks to a borrower .

General

The classic lending business is predominantly processed by a single bank with one borrower. However, there are cases in which the loan amount and / or the credit risk are so high that an institution does not want or is not allowed to bear this loan on its own and therefore invites other credit institutions as lenders to cooperate in the form of the syndicated loan . The credit amount and / or credit risk are limited by the individual risk-bearing capacity of each institution. Particularly large exposures or million loans may be affected. The aim is to avoid or reduce cluster risks in the credit portfolio of the institutions through granularity . Syndicated loans therefore also serve to diversify risk .

The syndicated loan is not an independent type of loan , but rather a special form of processing a banking transaction . The syndicated loan is made available in international credit transactions, especially for large companies and multinational companies . Reasons for processing a syndicated loan are also an existing bank account and, if necessary, the customer's request .

Legal bases

According to German law , the banks combined in a consortium ( consortium banks ) form a company under civil law (GbR or BGB-Gesellschaft) according to § § 705 ff. BGB . A bank consortium of this type can be organized as an internal or external consortium, depending on whether the borrower is informed about the establishment of a bank consortium or not. The external consortium enters into contractual relationships with the borrower as such, with the lead manager acting on behalf of the consortium towards the borrower. In the case of the internal consortium, the lead manager acts exclusively in his own name, but for the account of the consortium, which is disclosed to the borrower in the open internal consortium. In the case of the internal consortium, legal relationships only exist between the borrower and the lead manager. Only as an external consortium does it enjoy legal and party status and can thus become the holder of a loan claim and the debtor of the borrower's payment claim. In deviation from Section 709 of the German Civil Code (BGB), the management authority rests with the lead manager, which at least includes conducting negotiations with the borrower. According to the rulings of the Federal Court of Justice, the consorts are ancillary liability for breaches of duty by the consortium leader. This external liability can be divided into the internal liability within the consortium in the consortium contract. For the internal relationship between consortium and the underwriters the rules apply on the agency agreement (§ 675 § ff. BGB). The centralized consortium will loan processing (credit payment, settlement and withdrawal of interest and principal payments) taken over by the consortium, which in the internal relationship settles proportionately with the syndicate members, the inner consortium therefore regularly as a centralized consortium is led. In both cases, the sole owner of the credit claim is the lead manager, so that the borrower only has to account for a single credit liability against him.

Consortium leader

The lead manager ( English sole lead manager ) or several ( English joint-lead manager ) takes over as primus inter pares , the coordination between the consortium and the borrower both in the preparation of the loan agreement as well as the settlement of the syndicated loan. Contrary to Section 709 of the German Civil Code (BGB), he is responsible for the sole management authority, which at least consists of conducting negotiations with the borrower. The consortium leader usually also takes on the function of the bookrunner , who in particular determines the allocation of the consortium quotas. As a rule, the consortium leaders also have a higher consortium quota than the other consortiums. In the external relationship, the syndicate leader is the sole legal owner of the credit claim, is responsible for the disbursement of the entire syndicated loan and for the calculation and collection of interest and repayments. The consorts are only proportionally involved under the law of obligations. Internally, he distributes all credit transactions proportionally to the consorts. This deviates from the regulation of § 722 BGB, so that the default risk is only borne proportionally. In order to limit the liability of the consortia to their consortium quotas, an express limitation of liability is required in the consortium agreement, whereby an externally identified regulation in the internal relationship is not sufficient. The syndicate leader and all syndicates have to make their own credit decision for their syndicate quotas as with any other loan.

Consortium reservation or underwriting

A (strict) syndication or consortium reservation by the lead manager is subject to the condition that the final amount of the loan is dependent on the consortium shares actually taken over by the consortia ( English best effort ). The syndicate leader makes the granting of a syndicated loan of a certain amount dependent on corresponding syndicated commitments by the syndicates. If the loan amount is not reached, the syndicated loan will either not come about or only in the amount of the existing syndicated loan. If demand is high, syndicated loans that are higher than planned can also result. In terms of banking supervisory law, only the loans actually granted need to be reported if the loan amount falls below the desired amount. Taking into account the own share of the syndicate leader, only the loan amount that the syndicate is able to provide is made available to the borrower.

With underwriting, on the other hand, the lead manager undertakes to provide a precisely defined loan amount without the entire consortium shares of future consortia being important; The lead manager runs the risk of having to represent the entire loan amount alone in the worst case. In the first case, issuing syndicates (securities) are issuing syndicates that are subject to the regulation of Section 1 (1) sentence 2 no. 4 KWG (financial commission business). For regulatory purposes, underwriting is considered an issuing business in accordance with Section 1 (1) Sentence 2 No. 10 KWG.

Form and content

In the external consortium, the syndicated loan agreement is concluded on behalf of the consortium, so that the consortium with legal capacity is authorized and obliged; the consortium leader represents the consortia. In terms of content, syndicated loan agreements largely correspond to a loan agreement . They are supplemented by the typical consortium regulations that affect the consortia among themselves. In Germany, too , the consortium contract principles developed by the British Loan Market Association (LMA) have established themselves in terms of form and content , insofar as German law allows this ( choice of law ). Therefore, the consortium contracts based on the English model often contain all conceivable regulations, many of which are unknown to German law. The lead manager or Documentation Agent ( English Documentation Agent ) is Negotiators an agent for the banking syndicate to the borrower. The consorts are involved in the interim results and give their opinions on them. The results from this flow into the syndicated loan agreement. Since the borrower does not have to deal with one bank alone, the syndicate agreement also contains clauses on the coordination behavior of the syndicate banks with one another in the event that the consent of the consortium is required. Usually 2/3 of the consorts - measured by their consortium share - have to agree if, for example, the consorts are to waive a right to which they are entitled ( English waiver request ).

In Germany, too, the LMA model contracts have largely prevailed. They are based on Anglo-Saxon case law , which tries to cover all conceivable situations through regulations. It is preceded by a section with definitions of terms that are assumed to be known (such as interest rate and margin ). It is not usual to quote legal provisions or to include the general terms and conditions of the credit institutions . A large number of clauses follow , some of which only apply under English law. To the usual clauses pertaining negative pledge , pari passu , cross default clause , default clause , the significant deterioration in the financial circumstances ( English material adverse change ) or financial covenants .

Savings banks and cooperative banks

In the case of savings banks and cooperative banks / Raiffeisen banks , the joint loan or metakredit ( Italian metà , "half") is a syndicated loan in the form of a silent sub-participation that a savings bank with its Landesbank or a cooperative bank with DZ Bank makes available to a joint borrower. Meta credit is misleading because the credit split is not always 50:50. The institutes cannot or are not allowed to take on certain loan amounts and / or credit risks on their own because of their size , risk-bearing capacity or for reasons of savings bank law or the articles of association and therefore seek cooperation in the respective network .

Purpose and goals

Syndicated loans are granted if the loan amount and / or the credit risk is too great for an individual bank and these would exceed reporting thresholds (in particular large loans according to § 13 KWG, million dollar loans according to § 14 KWG) or if cluster risks would arise for an individual bank. This risk is reduced by distributing it to various banks that are not affiliated with the group. The syndicated loan is therefore an essential instrument for spreading risk. With syndicated loans, the borrower is spared the need to take out a large number of loans from different banks with possibly different loan terms, because with the syndicated loan he only has to communicate with the syndicate leader and receives uniform loan terms. Once the syndicated loan has been repaid, the purpose of the consortium for which it was formed also ends.

See also

Web links / literature

Individual evidence

  1. ↑ Verlag Dr. Th. Gabler GmbH (Ed.), Bank-Lexikon: Concise dictionary for the banking and savings bank system , 1978, Sp. 935 f.
  2. ↑ Manuel Falter, The Practice of Credit Business , 2007, p. 554
  3. ^ Carsten Peter Claussen, Stock Exchange and Banking Law , 2000, § 9 No. 304
  4. ↑ BGH NJW 1991, 2629
  5. ↑ Dorothee Einsele, Banking and Capital Markets Law: National and international banking transactions , 2006, p. 311
  6. ↑ BGH NJW 2001, 1056
  7. ↑ a b Peter Derleder / Kai-Oliver Knops / Heinz G. Bamberger, Handbook on German and European Banking Law , 2003, pp. 457f.
  8. ^ A b Herbert Schimansky / Hermann-Josef Bunte / Hans-Jürgen Lwowski (Hadding), Banking Law Handbook , § 87 Rd. 34.
  9. ↑ BGHZ 146, 341 , 343 ff.
  10. ↑ BGHZ 142, 315
  11. ↑ Peter Rösler / Thomas Mackenthun / Rudolf Pohl, Handbook of Credit Business , 2002, p. 188