Smaller Banks Helping Build Foreign Share of U.S. Syndicated Loans
NEW YORK -- Some foreign banks are increasing their share of the syndicated U.S. bank loan market, according to Loan Pricing Corp., a New York-based company that does research into commercial lending.
A decline in lending by the biggest Japanese banks appears to be leveling off, while "lending by Japanese trust and regional banks and smaller European banks is increasing," said Mitchell Gersten, an analyst with the company.
Mr. Gersten added that although total foreign bank lending is not growing as fast as in 1989 and 1990, lending by smaller regional banks from Europe and Japan is continuing to raise foreign banks' share of the U.S. loan market.
A recently released survey by the firm found that foreign banks held 51% of the 10,760 primary positions in syndicated U.S. commercial bank loans last year, up from 47% in 1989 and 45% in 1988.
Foreign banks have also steadily increased their role as agents, or syndicators, of loans in the U.S. market, capturing 718 slots, or 28% of all agent roles, up from 21% in 1989 and 21% in 1988.
The survey is the second that has recently predicted foreign banks will increase their share of the U.S. banking market.
Further Increase Expected
According to a poll released last week by Arthur Andersen & Co. and the Chicago-based Bank Administration Institute, financial industry officials expect foreign banks to increase their share of U.S. banking assets to 30% by the end of the decade, from 23%.
Among the Loan Pricing Corp.'s other findings:
* Banks from Canada, England, France, Germany, Switzerland, and Japan accounted for 80% of all foreign bank syndications in this country and 82% of the agent roles taken by foreign banks.
* Canadian, English, French, and Japanese banks have scaled back their share of total syndicated lending by foreign banks to 61%, from 72% in 1988.
* German, Swiss, Dutch, and Finnish banks as well as banks from other smaller European countries have increased lending, with Finnish and Austrian banks among the most active.
* Most foreign bank lending is to large U.S. corporations.
* Foreign banks earned less on U.S. lending than U.S. banks. The average spread on loans by foreign banks in the U.S. during the first quarter this year was 90 basis points over the London interbank offered rate, compared with 125 basis points for U.S. banks. [Tabular Data Omitted]