James B. Lee Jr. has dot-com fever.
Mr. Lee, a vice chairman and head of global investment banking at Chase Manhattan Corp., told lenders on Wednesday that near-term growth in syndicated lending would come from booming mergers and acquisitions in Europe and from new technology companies in the United States.
But technology "is still a tricky place to do business," Mr. Lee warned. "What we will all do is we will get to know a lot of on-line companies and we will bank them and all of us are going to have to get smart about who are the winners and who are the losers."
His remarks highlighted the first day of the annual Syndicated Loan Symposium in New York, sponsored by Strategic Research International and American Banker.
The two-day conference was crowded with new faces this year as the $1 trillion U.S. loan market continues to shed its traditional investor base - other banks - and taps a growing number of institutional and retail investors.
Mr. Lee, who started a syndicated loan shop for Chemical Bank in the 1980s, is one of the people many lenders credit with shaping today's syndicated loan market. Chase, which merged with Chemical in 1996, ranks No. 1 in the business. But it's only recently that Chase and Mr. Lee have preached the importance of the technology industry to its corporate finance business.
Mr. Lee repeated the bank's message that its recent agreement to buy Hambrecht & Quist Inc., a technology-focused investment bank, was an acknowledgement that a lot of future corporate finance business will be for telecommunications, Internet, and computer-related industries.
The Hambrecht & Quist acquisition reflects the San Francisco-based investment bank's strength in the tech sector and "the power of the new on-line companies, how quickly they become mature," Mr. Lee said. "There's some powerful stuff going on that's fueling a lot of the growth and also has big time ramifications for bankers."
For instance, Mr. Lee said Chase is increasingly being asked by customers how to deal with online competition. Lenders may need to evaluate relationships corporate clients that have a core customer base that's off-line.
"You need to ask yourself, does your off-line client have a Barnes & Noble problem?" Mr. Lee said.
Meanwhile, lenders will also have to pay attention to foreign loan markets. U.S. banks are financing a record number of M&A deals in Europe this year. Chase and three other banks led a $23 billion loan for Olivetti SpA in the spring - at that time a record. Now that deal size may be doubled by Vodafone AirTouch PLC's hostile bid for Mannesman AG.
"Olivetti is now small potatoes compared to Vodafone-Mannesman," Mr. Lee said. That deal, "means everything in Europe is fair game. I like to refer to Europe as the U.S. on steroids."
More importantly, Mr. Lee said, the bank market is still the best place to raise huge sums of money in a short time - a characteristic that will become more important as the cycle of deals continues to accelerate. But banks need to keep bulking up to serve the huge companies created by mega-mergers.
"The clubs you needed in your bag to be the lead bank for Daimler or Chrysler are not the clubs you need to be the lead bank for DaimlerChrysler," Mr. Lee said. "You need more of everything. More money. More stuff."