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Chinese banks were the most active in international syndication in 2013 compared to other financial institutions in the Asia Pacific region, according to a survey commissioned by Misys, a leading loan servicing solutions provider to banks in Asia for 30 years and conducted by The Asian Banker.
Asia-Pacific (excluding Japan) witnessed one of the best years in the syndicated lending business in 2013 with a volume of USD 462 billion, an increase of 51% year-on-year. China was the biggest contributor with a volume of USD 117 billion from 320 deals, a huge increase of 99% year-on-year and a 25% market share of the region’s total volumes. Corporate lending was led by the ‘Big Four Banks’, namely Bank of China which was the biggest regional player accounting for 8% of Asia Pacific volumes, Industrial and Commercial Bank of China, China Construction Bank and Agricultural Bank of China.
Chinese banks have not only shown their dominance in the syndicated lending business in China but have also been an active player across the region with four of the top mandate arrangers in the region coming from China. Even in a developed economy like Australia, Chinese banks have been actively participating in syndicated deals and have proved to be competition to the top four Australian banks.
Hong Kong saw an increase of 86% largely due to offshore lending to Chinese firms, which contributed 70% of the Hong Kong volumes. Emerging markets such as Thailand, Malaysia, Philippines, Indonesia and Vietnam also saw an increase of 90% in volumes. With Japan included, the Asia Pacific volume was USD 738 billion, accounting for 18% of global volumes and just 1% less than European volumes. This is a big jump in a business once dominated by the US and Europe.
Amit Chopra, Syndicated and Commercial Lending Specialist, Misys, commented, “China has been one of the few countries where syndicated lending has continued to grow through the global crisis; high liquidity in the banking sector is one of the reasons for this growth. With a non-performing loan percentage as low as 0.08%, this form of lending has been very well accepted by the Chinese banking sector as it also allows banks to diversify lenders’ risk without compromising the quality of credit.”
Domestic syndicated lending volumes in China also proved strong in 2013, amounting to USD 724 billion, a 21% increase from the previous year. China Development Bank led with 27% of the domestic market share, followed by Industrial & Commercial Bank of China at 14%.
As competition increases within the corporate lending and loan syndication landscape in China’s banking sector, banks will need to compete on better products and services to draw and retain clients. Financial institutions across the globe have embraced technology to grow their business in challenging environments as currently faced by banks in China.