Syndicated bank lending increased 60% in Europe, the Middle East, and Africa last year, to a record $498 billion, driven by a surge in mergers and acquisitions.
Thomson Financial Securities Data, an affiliate of American Banker, said that Britain's Barclays Bank PLC ranked as the top syndicator, with $43 billion worth of loans. Citigroup Inc. moved into second place last year, with $36 billion, up from $22 billion the year before. Deutsche Bank AG, which last year bought Bankers Trust Corp. of New York, came in third, with $34 billion.
European banks such as France's Credit Agricole IndoSuez and Banque Nationale de Paris, ABN Amro in the Netherlands, and London-based HSBC Holdings PLC arranged big shares of the region's syndicated loans.
However, some U.S. banking companies figured prominently as well. Chase Manhattan Corp. came in sixth, with $20 billion, only slightly better than its $18 billion the year before. Bank of America Corp. was 15th, with $13 billion, up sharply from $3.6 billion. J.P. Morgan & Co. was ranked 22d, with $7.6 billion, down from $11 billion.
Barclays also took first place in the high-yield sector, arranging $5.8 billion, and Chase was No. 2, with $5.6 billion. J.P. Morgan and Citigroup were also ranked among the top 10 in putting together high-yield loans.
By far most of the increased demand for bank loans was to fund mergers and acquisitions, which more than doubled last year, to $1.2 trillion.
However, banking sources also said the lending market has become far more liquid since the introduction of a single currency by the European Union last year. Banks are also keen to boost lending in order to replace earnings no longer available from currency trading and bond arbitrage, these sources said. Since many of the loans are subsequently refinanced through bond, equity, and asset sales, the risk involved in arranging large corporate loans has also been reduced.
A similar effort to improve earnings is also increasing high-yield loan volume, they added.