BWBB 3083 CORPORATE BANKING

FIRST SEMESTER 2019/2020 SESSION (A191)

ASSIGNMENT

TITLE :
SYNDICATED LOANS

SUBMITTED TO :
DR.LOGASVATHI MURUGIAH

(GROUP A)

PREPARED BY :
NO. NAME MATRIX NUMBER
1. AHMAD SYAHIRAN BIN AHMAD HUSHAIRI 238592
2. MOHD AMIR BIN MOHD FAIROZ 247554
3. NURUL SYAZWANI BINTI MOHAMAD RAFLLI 258968
4. ATHIRAH FATINI BINTI MOHD BAHAR 259010
5. NUR TASNEEM BT MOHD ZIN 259018
6. WAN SYARAFANA BINTI WAN YUSAINI 259071

Submitted date
(25th November 2019)
 CONTENTS

NO. CONTENTS PAGE

1. Introduction of Syndicated Loans 1-2

2. Features Of Syndicated Loans 3-5

3. Types of Syndicated Loans 6-8

9-11
4. Participants of Syndicated Loans

12-14
5. Syndicated Loans Process

15-17
6 Advantages & Disadvantages of Syndicated Loans

18-21
7 Syndicated loan that used in Malaysia and other countries

22
8. Conclusion

23
9 References
1.0 Introduction of Syndicated Loans

Syndicated bank loans has been the predominant types of financial in the world since the
early 1990s , and were the principal source of financing for firms in the USA in the mid- 2000s .
The size of loan is large, individual banks cannot or will not be able to finance, they would prefer
to spread risk among a number of banks or group that is called as “syndication of loans “on that
situation. These days there are large group of banks that form syndicates to arrange huge amounts
of loans for corporate borrowers the corporate that would want a loan but not focus on the banks
that willing to lend.

Hence, syndication pays a vital role here. once the borrowers has decided to make some
size of the loan, borrowers need to provide an information memorandum containing all the
information like the amount he requires , business details of his country its economy and the
purpose of their project. Then he receives bids, after this the borrower and the lender sit across the
table to discuss about the terms and conditions of lending this process of negotiations are called
“syndication”. The process of syndication begins which an invitation for bids from the borrower.
The mandate is given to a particular banks or institution that will take the responsibility of
syndicating the loan while arranging the financial banks.

Syndication is done on best an underwriting basis, it is usually the lead manager who acts
as the syndicator of loans that borrower want to borrow, the lead manager has dual tasks which is,
formation of syndicator documentation and loan agreement. Common documentation is signed by
the participation banks or common terms and condition. thus, the advantage of the syndicated loans
are the size of the loan , speed and certainty of loans , maturity profile of the loan, flexibility in
repayment , lower cost of fund,

In the mid-1980 when the larger buy outs needed bank financing, the syndicated loan
market became the dominant way for issuers to tap banks and other institutional capital providers
for loans. In the late 90 to early 2000s hundreds of collateral loan obligation funds (CLOs) were
created and joined the loan syndication process. These funds were referred to as non-bank
institution or institution investors. This institutional investor played a key role in the exponential
growth of the mega LBO deals seen in 2005-2007. By 2007 nearly 75% of loans were provided
by non-banks, versus less than 20%
 A loan provided by many lenders for a single borrower. Syndicated loans are made in
biggest amounts of money that would be too large for one lender to handle it. In many ways, a
syndicated loan operates like an ordinary loan, there is an interest rate that can be fixed or floating
and a time until repayment is due. It may be a direct loan of credit or a combination of the two.
However, syndicated loans are usually made on a best effort basis, meaning that if the lenders are
unable to find additional lenders to cover the amount requested or enough capital, the amount
borrowed will be less than anticipated. They are common in leveraged buyouts.
 2.0 Features of Syndicated Loan

Loan syndication refers to service and rendered by an organization in arranging and

procuring credit from the financial institutions, banks, other lending and investment companies for
financing the project or meeting the working capital requirements. The borrower can be a
corporation, a large project, or a sovereign government. The loan can involve a fixed amount of
funds, a credit line, or a combination of the two. The syndicated loan also is a financing method
evolved from bilateral loan. Under the arrangement of syndicated loan, one bank or several banks
(as the arrangers) organize other banks to grant loans to the same borrower under one loan
agreement according to agreed terms. (Ivashina, V., & Scharfstein, D.2010).

1) Large amount and long term.

It can meet borrowers' demand for funds of long term and large amount. It is generally

used for new projects loans, large equipment leasing and enterprises' M&A financing in

transportation, petrochemical, telecommunication, power and other industries.

2) Less time and effort for financing.

It is usually the responsibility of the arranger for doing the preparation work of

establishing the syndicates after the borrower and the arranger have agreed on loan

terms by negotiation. During implementation of the loans, the borrower does not need

to face all members of the syndicate, and relevant withdrawal, repayment of principal

with interest and other management work related to the loans shall be fulfilled by the

agency bank.
3) Diversified approaches to syndicated loans.

The same loan syndications can include many forms of loans, such as fixed-term loans,

revolving loans, standby L/C line on requirements of the borrower. Meanwhile, the

borrower can also choose RM, USD, and EUR, GBP and other currency or currency

portfolio, if needed.

4) It can help borrowers establish a good market image.

Successful establishment of the syndicate comes from the participants' full recognition

of the borrower's financial and operational performance, by which the borrower can

build up their reputation.

5) Differences between syndicated loan and joint loan

Item Syndicated Loan Joint Loan

All banks independent from

All members join together to
Inter-bank each other contacts with
contact with borrowers through
Relationship borrower separately
lead and agency banks.

All banks make loan decision on

All banks collect information
Approval of the basis of the information
separately and go through
Loans memorandum provided by the lead
many rounds of examination.
bank
6) Currency

Syndicated loan mainly adopt RM. Besides it, USD, EUR, GBP and other currencies are

also available. Multiple currencies can be used in a single syndicated loan on demand of

the borrower.

7) Term

Three to five years for short-term, seven to ten years for medium-term and 10-20 years for

long-term.

8) Interest Rate

The price of syndicated loan is composed of loan interest and fees. Lending interest rate

shall be set, according to different borrowers, in line with lending interest rate policies of

the People's Bank of China, lending interest rate regulations of Bank of China and

provisions of the syndicated loan contracts.

9) Charges

Charges mainly include arrangement fee, underwriting fee, agency fee, commitment fee.

10) Target Customers

1. Borrowers who require long-term and large-amount loan.

2. Borrowers with high reputation in the industry, whose operation ability as well as

financial and technical strength are recognized by most banks.

3.0 Types of Syndicated Loans

Syndicated loan happens when a group of banks lend money to a borrower at the same
time and reason. Loan syndication may occur as a borrower needs a loan which is too large for a
single applicant or that exceeds a single lender's risk-exposure levels. If a single creditor is unable
or refuse to finance a sizeable loan, lenders may arrange funding via one or more lead banks. The
agent of the syndicate deals with the lender to achieve interest rates, conditions of payment and
other information outlined in a term sheet. There are three types of syndicated loans which are
Underwritten deals, Club deals, and Best-efforts syndication.

3.1 Underwritten Deals

An underwritten deal is one where the entire loan obligation is secured by a
particular lender or know as the loan arranger, and then proceeds to carry the burden with
other lenders. If the arranger is unable to find other lenders also known as subscribers, then
the difference must be absorbed. The arranger might then try to sell the loan in the form of
debt securities to investors. An underwritten deal is one for which all commitment is
guaranteed by the arrangers and then the loan syndicated. If the arrangers are unable to
fully subscribe to the loan, they will be forced to absorb the difference that they may try to
sell to investors later. this is possible when economic dynamics or the quality of credit
change. If not, the arranger may be pressured to sell at a discount or possibly take on the
document even a risk. Or it may just abandon the arranger above its optimal credit keep
point. Arrangers were investing for a number of reasons. First, an underwritten loan can be
a successful resource for securing mandates. Next, underwritten mortgages generally
require more generous payments because if prospective borrowers hesitate, the broker is
on the line. Generally, the signing of an agreement does not carry the same risk that it once
posed when the price was set in stone before syndication.

The underwritten deal is one of Europe's most common forms of syndicated loans.
Under this agreement, all loans are insured or syndicated by the lead lender and
underwriter. If the loan is not fully subscribed, the lead agent may choose to absorb the
undersubscribed section. If market conditions are bullish then the same lead agent can sell
the undersubscribed portion of the loan it has absorbed to other investors. However if the
markets become bearish, the lead arranger may be forced to sell some undersubscribed
portion at a discount or just to accept the whole thing as a loss. A bank can choose to
become the underwriter for several reasons. First, this type of loan can make it look more
competitive for a financial institution. Next a syndicated mortgage can result in huge
income for the lender as the uncertainties involved in this type of lending could translate
into higher service charges. Finally underwritten loans now have variable interest rates,
which ensures that the costs are no longer as large as fixed-rate debts.

3.2 Club Deals

Club deals are usually smaller transactions that are pre-marketed to a creditors
community. The lender may manage the loan on its own or by an arranger. If there is an
arranger, then other lenders will not be treated differently. For instance, all lenders will
share the fees and loan equally. The main feature that makes this form of syndicated loan
different is the idea that all pay equivalent and nearly equal portions of the profits received
from the lending facility by the lead broker and other representatives of a club deal
consortium.

The Club Deals are a type of syndicated loans with virtually the same assets. Often,
many banks were interested in a single credit arrangement in the case of a club contract.
Unlike the syndicated loan, the lender and the individual banks may make individual
agreements. Generally the group comprises of the borrower's core banks with a business
relationship. The loan amount for team transactions is smaller than the syndicated loans.
The size mostly ranged from 25 million dollars to 50 million dollars. Most of these types
of loans are used by medium-sized companies. Within the alliance, the number of banks
becomes lower, resulting in decreasing monitoring costs. Club deals are often more risky
in terms of failure, as the firms are not large companies giving free reviews. They are
achievable and can easily agree on how they should continue if the credit agreement needs
to be changed, or problems arise with borrowers repayment. This is much easier than in a
large, high number of banks syndication. Banks often receive the same fees in a club deal,
as long as the size of the loan shares is the same.

3.3 Best-Efforts Syndication

A syndication of the best efforts is where the loan arranger contributes part of the
loan or tries to share the burden with other borrowers. If there are no potential borrowers,
the loan may not continue or its conditions may be modified to draw further creditors. Even
so, the arranger is not required to take up the rest amount of the loan as an underwritten
contract indefinitely. A syndication of best efforts is one for which the group of arrangers
undertakes to underwrite less than or equal to the whole amount of the loan, leaving the
loan to market vicissitudes. If the loan is undersigned, the loan may not close or may require
major operations to clear the market.

Best effort deal also known as best efforts offering. A bank loan funding where an
intermediary institution decides to use its best efforts or commercially reasonable efforts
to negotiate a borrower syndicate that will fund the loan but has no right to make the loans
itself although it often undertakes to finance a small portion if the loan is entirely
syndicated. Either the conditions are renegotiated or the loan is not extended if the loan is
not completely syndicated. Agent banks also tend to use economically reasonable efforts
because it is considered to be a somewhat more delicate benchmark than best efforts that
practitioners consider to entail extraordinary measures, although not a definite standard. It
compares with a fully underwritten deal where the bank manager decides to finance the
loan whether or not it can organize a loan syndicate.
4.0 Participants in the Syndicated Loans

Participating members in syndicated loans can give these banks a chance to lend to
borrowers in regions and industries to which they might otherwise have no convenient access.
Capital constraints also promote loan syndications. Participating in a syndicated loan thus allows
a small bank to make a loan to a large borrower it could not otherwise make. Not all participants
in syndication loans are always in the same rank. Their ranks may vary depending on the type and
size of the loan, depending on the size of their participation and the nature of the role assigned to
them under the facility agreement. Therefore, a few bankers joint together to give loans of big
amount to a borrower on the same terms and conditions such as:

4.1 Lead Banks

The arranging bank is also known as the lead bank and is mandated by the borrower
to organize the funding based on specific agreed terms of the loan. Lead banks in
syndicated loans are responsible for providing credit information and loan documentation
to participating banks. To the extent that lead banks may behave opportunistically and
withhold unfavorable information from participating banks, the latter may be misled into
making loans that are riskier than they had thought. When a syndicated loans is undertaken
by one bank known as lead banks that acts as syndicate manager such as recruiting a
sufficient number of other banks to make the loan, negotiating details of the agreement, as
wells as preparing documentation. The lead banks handles disbursements and repayments
and is responsible for disseminating the borrower’s financial statements to the syndicate
members. The lead banks is paid a fee by the borrower for these services. Sometimes, the
lead banks hire one or more other banks as co-managers who share in the fee in return for
helping with the bank’s duties.

4.2 Co-Manager
Co-Manager issuers give to entities with which they have some form of cross-sell
commitment. Usually, Co-Manager do not perform a function as such and their role is
therefore junior. Consequently, they receive much lower fees. Co-managers are chosen
because of the ability to provide analysis coverage or market-making or because their
distribution network complements that of the lead manager. In addition, they also may be
included in the syndicated loans because they have loaned money to the issuer, thus
acquiring a relationship with the issuing company. Therefore, they are appointed to
facilitate the smooth execution of the transaction, liaising with lenders counsel and the
lenders themselves to ensure fluid communication and consensus on the Facility
Documentation.

4.3 Participating Banks

Participating Banks refer to the banks that accept an invitation of the lead banks to
join the syndication and provide loans in line with their commitment allocation.
Participating banks may have diverse commitments in a single syndicated loan facility.
Moreover, Participant Banks provide comments on and negotiate the loan documentation.
Traditionally, the arranger acts as a conduit between the borrower and the participant bank
for the purpose of facilitating the negotiation of the loan documentation. In practice, the
participant banks including the arranger who is also usually a participant bank in its own
rights, collectively negotiate the loan documentation with the borrower, rather than each
participant bank negotiating separately. Furthermore, to facilitate this process the
participant banks usually agree to appoint the same legal counsel to represent all the
interests of the participant banks in the syndicate. In addition, Participant banks that
undertake the role of arranger under a syndicated loan are remunerated by the borrower by
way of payment of arranger fees. Calculation of arranger fees may be preferable to the
underlying funding commitment of that participant bank in the syndicated loan, such as a
specified number of basis points payable by reference to the drawn commitment under the
loan facility, or perhaps it may be a fixed amount.

4.4 Agents Banks

The agent bank is appointed by the banks and financial institutions involved in the
syndication loan to act on its behalf as an administrative agent, often chosen by lenders in
consultation with the borrower, or the bank appointing itself to act as agent and typically
earns an agency fee that usually payable annually to cover the costs of administering the
loan. Furthermore, the agent bank shall ensure that there is an explicit provision in the
credit facility agreement in the syndication loan contract. For example, it confirms that
there are no implied duties other than those expressly provided for in the contract. The
agent bank shall ensure that there is an explicit provision in the facilitation agreement
confirming that the law and the provisions of the ordinary agency do not apply to him and
that what applies to him are the local and international banking conventions in this field.
Besides, the agent banks in syndicated loans serve as a link between the borrower and the
lenders and owe a contractual obligation to both the borrower and the lenders. The role of
the agent banks to the lenders is to provide them with information that allows them to
exercise their rights under the syndicated loan agreement. However, the agent bank has no
fiduciary duty and is not required to advise the borrower or the lenders. In addition, loans
sometimes incorporate a penalty clause whereby the borrower agrees to pay a prepayment
fee or otherwise compensate the lenders in the event that it reimburses any drawn amounts
prior to the specified term. Lastly, the agent bank shall ensure that the contract does not
prevent bank from practicing any activities or other banking operations with the borrower,
or prevents bank from taking over the bank agent's job with other banking groups and
reserving any provisions that prevent bank from doing so because such a reservation gives
him the opportunity to take care of his own interests placing it in an appropriate legal
position and relieving it of the consequences of civil liability.
5.0 Syndicated Loans Process

Diagram 1.0: The Loan Syndication Process

Process of Loan Syndication :

i. Appointment of Investment Bankers

The syndication process starts with an Arranger is appointed. An Arranger is the
several investment banks serve as a lead arranger to arrange such type of loans. The
investment bankers have arranged a loan facility for corporate that are in the requirement
of capital. Therefore, the Arranger prepares a document usually called an Information
Memorandum describing the terms of the transaction, investment considerations, executive
summary, a list of terms and conditions, an industry overview and a financial model. This
is because the investment bankers get their fee as a certain percentage (%) of the amount
 of loan arranged. The bank fee charged depends upon parameters such as intricacy of the
transaction, existing loan, borrower's credit rating and borrowers' financial strength.

ii. Preparation of Detailed Documents

After the appointment of investment bankers is completed, invitations are sent out
to banks to participate in the syndication. Once respective commitments are obtained from
the banks, confidentiality agreements are sent to the banks for execution after which drafts
of the Loan Documentation are circulated amongst the banks for review. Investment
bankers study the documents of the borrower when they get the documents. Thus, the
Investment banker is prepared the required detailed project report in a particular format.
After that, the bank submits a request for credit to financial institutions.
There are several documentation are required by the bank such as company profile
along with financial data, project techno-economic feasibility study, project cost estimates,
revenue projections, profitability estimates, cash flow of projections, collateral security and
guarantees provided, legal documents of the company like Memorandum of Association,
Registration Certificate, director’s details and their credit score.

iii. Approaching Different Banks

Next, after the bank has the detail documentation, the Investment bankers then
approach the different banks to participate in the loan syndication transaction. After that,
each bank will inform its respective commitment to the loan transaction. The bank with the
highest exposure is called a 'Lead Bank'. The lead bank stipulates the terms and states of
the sanctioned loan in a document. The document is known as a ‘Term Sheet’. The Term
Sheet contains details such as an amount of loan, the rate of interest, collateral or guarantee,
repayment schedule, special terms if any. Investment Bankers will negotiate with the terms
to make ensure easy approval of credit facilities.

iv. Document Circulation and Execution

When the syndicate has given its commitment, the Loan Documentation is
circulated amongst the banks for review and execution subsequently. The investment
bankers work until sanction and disbursement of these credit facilities. The Loan
documentation is eventually executed by all parties and the process of perfection
 immediately commences at the Stamp Duties Office, filing documents with Registrar of
Companies (ROC), Lands Registry, Ship Registry and Ministry Corporate Affairs (MCA)
and others. The document execution relies upon the type of asset used as collateral security.
The collateral is shared on a pari-passu premise whereby each loan specialist is positioned
according to their commitment

v. Fulfilment the Conditions of the Loan

After the execution of the Loan documentation, the Borrower would need to satisfy
the condition precedents as stipulated in the Agreements before disbursement of the loan
can be made by the Facility Agent. There are may also be conditioned subsequent in the
Agreements which the Borrower would be bound to comply with after disbursement of the
facility. The conditions subsequent usually entail the perfection of the security at the
relevant government agencies.

vi. Security Trustee

The Arranger, Facility Agent, Lenders, and the Security Trustee are entitled to the
specific type of fees for their respective roles in a syndication transaction. Usually, bankers
appoint a security trustee in syndicate financing transactions. The security documents are
held in the care of the security trustee. The security trustee follows up on the directions of
the syndicate lenders for security enforcement. The Security Trustee’s fee is usually an
annual fee that becomes immediately payable upon the execution of the transaction
documents and on the anniversary of the execution date of the transaction documents. The
Security Trustee’s fee is likewise payable in advance and net of all taxes.

vii. Fee Distribution

Upon loan disbursement, the Investment Bankers receive a certain percent (%) of
the amount of loan arranged as their transaction fee. This is because, in commercial terms,
the syndication is a single loan transaction. The liabilities of the lenders are however
independent of each other in legitimate terms. A single lender in syndication transactions
cannot take enforcement action without the majority votes of the lenders in favor of such
enforcement action. Thus, the security is also shared on a pari-passu basis where each
lender ranks as per their contribution and is paid pro-rata of all payments or recovery.
6.0 Advantages and Disadvantages of Syndicated Loans.
6.1 Advantages of Syndicated Loans.

6.1.1 Advantages to Borrower

6.1.1.1 Provide larger amount of fund than any single lender can provide.

By using syndicated loan, the borrower can obtain huge amount than usual
loan from a single lender can provide to finance their business plan like buying
expensive equipment, mergers, and many other transactions that need huge amount
fund. This is because syndicated loan is a pool of funds from many participating
banks. It allows participating banks to commit fund towards with less risk. A single
lender would be unable to raise funds to finance such projects, and therefore,
bringing several lenders to provide the financing makes it easy to carry out such
projects. Because of this alliance, it can meet the credit needs of the borrower.

6.1.1.2 Borrower can enjoy the flexibility in structuring and pricing.

By using syndicated loan, borrower will have a lot of option in structuring

their syndicated loan including multi-currency option, risk management technique,
and prepayment right without penalty. Since the syndicated loan is contributed by
multiple lenders, the loan can be in different types of loans and currencies. The
varying loan types offer different types of interest such as fixed or floating interest
rates, which makes it flexible for the borrower. Also, borrowing in different
currencies protects the borrower from currency risks resulting from external factors
such as inflation and government laws and policies. Besides that, syndicated not
only provide flexibility and easiness in the process, but can also put the borrower
in front of the market and also expose them to new contacts and more competitions
for their business. This exposure is very useful to the borrower since it can provide
a lot of opportunity to them.
6.1.2 Advantages to Lender
6.1.2.1 Diversify risk in foreign lending.
Using syndicated loan, the lender can diversify the risk. This is because the
participating banks don’t have to provide a large amount of fund each. By pooling
of fund, they can obtain huge amount of fund to be lend in such less risky and safer
way. The lender can spread the risks and still can obtain good returns on the loan.
Syndication loan also provide the lenders more profitability in costs relatively,
since the risk are being shared by all the participating banks. In addition, they also
can use their other funds to lend to the other business to get more profit.

6.1.2.2 Lead and participating bank will receive fee income.

The participating banks who involved in syndicated loan will receive fee
income from the borrower. Borrower pays various type of fee to the participant
banks according to the syndicate fee structure. For an example like commitment
fee, upfront fee, facility fee and letter of credit fee depending on the function of the
participating banks. The fees syndicate participants receive and the interest on the
loan are the sources of potential income. Certain fees are shared among syndicate
participants according to their role in the syndicate and level of participation in the
financing.

Lead arranges receive an upfront fee for originating the financing, arranging
the syndicate and underwriting the facility. Co-underwriters (sub-underwriters)
earn part of the upfront fee received by lead arrangers, in proportion to their
respective commitment. Participant lenders commonly receive a closing fee in
proportion to the amount of their loan in addition to the margin on the loan. While
arrangers (underwriters) are generally most interested in generating fee income,
participant lenders are most interested in earning the margin on the loan. Where a
participant acts as the facility agent, the facility fee is earned. If a participant
provides a letter of credit together with a revolving facility, the letter of credit fee
is also earned and not shared with other syndicate participants. Lead arrangers
commonly assume the roles of facility agent and ancillary lender in syndicated
financing facilities.
6.2 Disadvantages of Syndicated Loans.
6.2.1 Time consuming process.

Syndication loan is a time-consuming process. This is because the lead

manager has to invite numbers of banks to participate in the loan. The lead manager
has to make a research which banks he wanted to invite and approaching the banks
one by one. The lead manager also has to negotiate with each bank requirements
and polices before they reach an agreement. Sometimes, the lead manager has to
wait for the decision of the participating banks whether they agree to join or not
which can take a long time.

6.2.2 If problem arise, it may difficult for borrower to satisfy all the banks
at the same time.

Every bank has their own demands and polices, it becomes difficult to
borrower to handle each one of them. For an example, if borrower cannot pay on
time, some of the banks want to bail out, some banks still want to continue, and
some banks might want more collateral to reduce the risk. It will give a difficult
time to the borrower to assess the situation and make a right decision. This is one
of the risks that the borrower will face when acquiring syndicated loan.

6.2.3 There can be error due to delay in communication among the member
of the participating banks.

Communication is the most important things in every business matter.

There is a probability that there might be a delay in communications, and this can
lead to several unnecessary complications. The lead manager has to be prepared to
mitigate and tackle this risk since it might affect the syndicated loan itself. The lead
manager also has to make sure that all the information that ben relayed to the
participating banks are correct and they receive the information in timely manner.
By doing so, this will help the participating banks in making decisions regarding
the syndicated loan.
7.0 Syndicated loans that used in Malaysia and other countries

7.1 Syndicated Loans in Malaysia

 OCBC Bank

OCBC Bank was the second largest financial services group in Southeast
Asia by assets and one of the world’s most highly-rated banks. OCBC Bank
rssecognised for its financial strength and stability, OCBC Bank is consistently
ranked among the World’s Top 50 Safest Banks by Global Finance.

Bank takes the lead in “Green” syndicated project loan financing for large
solar plant . The project financing structure for the promoter of the project, KBJ
HECMY Sdn Bhd, is aligned to meet the Asia Pacific Loan Market Association’s
(APLMA) Green Loan Principles to ensure global acceptance and benchmarking.
OCBC Bank is committed to the development of renewable energy in Malaysia, in
support of the Malaysian government’s target to increase the country’s generation
mix from renewable energy to 20% by 2025. The bank has two-pronged approach
is to first cease financing coal-fired power plants and then replace them with
greener alternatives such as the LSS plant in Perlis. Besides, this syndicated green
project financing is a testament of our pledge towards financing sustainable
developments as we seek to ramp up efforts to increase the percentage of renewable
energy projects in the Portfolio.
  Malayan Banking Berhad (Maybank)

Malayan Banking Bhd (Maybank) jointly led a group of lenders to provide a total
of US$ 219 million (RM898 million) for the design of a luxury residential tower in
Manhattan for the first syndicated sharia-compliant construction financing in New
York, USA.

The financing includes a senior construction loan of US$ 174 million and a
mezzanine loan of US$ 45 million. Maybank was appointed joint lead arranger,
together with Warba Bank of Kuwait for the syndication. This syndication is a
milestone in New York's first sharia-compliant construction financing, and it
reaffirms our ability to offer value-creating Islamic banking solutions to global
clients, Besides, as one of the leading banking groups in Asia, Maybank have been
at the forefront of funding major infrastructure and property development projects
across many countries.

7.2 Syndicated Loans in other countries

 DBS Corporate Banking

Syndicated loans in other countries are DBS corporate banking from

Hong Kong, China. Hong Kong is the Asia-Pacific region's second largest loan
market behind China (with the exception of Japan). In 2014, the Hong Kong
market's syndicated loan size hit a historic high of US$ 92.1 billion, up 16
percent from the previous year. 2015 is unlikely to sustain the 2014 volume;
syndicated loan volume fell to US$ 13.9 billion in the first quarter of 2015,
compared to US$ 23.7 billion in 2015. Loan syndication that used by DBS
corporate banking is secured financing with the top arranger for syndicated
loans in Asia pacific. DBS Loan Syndication is the leading arranger of
 syndicated loans in Asia (ex-Japan) and widely regarded as Singapore's best
loan house to ensure that your deal is successfully executed.

The group has a strong track record of capital raising across a wide range of
Asian industries. DBS Loan Syndication also secure a deal that is structured to
your unique needs because of the close relationships with bank throughout the
region. Besides, DBS Loan Syndication offers a wide range of loans that can be
best-supported or completed, but DBS also have tailor-made solutions based on
your specific needs.

For example, if you want to increase working capital, increase capital

expenditure or refinance, DBS Loan syndication offer simple vanilla corporate
financing, but also offer structured loans for acquisitions, leveraged buyout.
Next, the process takes to complete a standard Loan Syndication transaction
takes about two to three months to complete the average syndicated loan, but it
can be done faster if necessary.

 ICICI Bank

ICICI Bank is India's second-largest bank with total assets of Rs. 3,446.58
billion (US$ 79 billion) .ICICI Bank is the most valuable bank in India in terms
of market capitalization and is ranked third amongst all the companies listed on
the Indian stock exchanges in terms of free float market capitalisation. ICICI
Bank has set up a dedicated syndication desk in its International Banking Group
in India to pursue syndication business. The Syndication Group in India works
in tandem with the Corporate Banking Relationship Managers to lease with the
Indian corporates for arranging ECBs for them.

The Financial Institutions and Syndication Group (FISG) are responsible

for ICICI Bank's relationship with the financial sector. The FISG is responsible
for syndication of loans to corporate clients. They ensure the participation of
banks and financial institution for the syndication of loans. Some of the
products syndicated are Project Finance ,Corporate Term Loans ,Working
Capital Loans and Acquisition Finance, etc.

ICICI Bank syndicates control the risk sector by downsizing the industry
when market demand fails to meet the expectations. Next, The market for
syndicated loans is huge. The standard forces for why banks join forces in a
syndicate are risk diversification. The banks in the syndicate share the risk of
large indivisible investment projects. Syndicates may also arise because
additional syndicate members provide informative opinions of investment
projects. The motive for syndication is to control the risk of the loan portfolio,
rather than sharing the risk.. Syndicated loan services include structuring,
arranging and underwriting of loan facilities. The syndicated market is one of
the largest and most flexible sources of capital in the international finance
marketplace.
7.0 Conclusion

Banking sector has seen lot of transformation in the past post liberalization period, it has
become very important for bank to give services best to their capabilities. If the customer is not
satisfied with the services provided by the bank, they will transfer their account to some other
bank. Result it loss of revenue for the bank and the loss of good will. New technology needs to be
introduces in the banking sector as is utmost clear that people are not only expecting normal
banking services but they want to be as their business partners and help accordingly. Therefore,
the bank has given more and more services to the people in order to increased return from fee-
based function.

Professionalism is main key word in banking sector. People now expect the privatized
banks to become more and more professional rather that of earlier years where the staff has no
sympathy or understanding for the time value of the customer. Most people nowadays more
services to be provided, demand more working hours at lower cost. This situation led to more
professional attitude by the banking people. Perhaps the oldest form of services sector known to
human is going through a radical change not only throughout the world but also in Malaysia. The
greatest beneficiary of this change is none than the human itself.

Expectation from the study is that it may contribute to the real scenario of loan syndication
in the bank sector in Malaysia. Loan syndication is the process of involve many different lenders
in to providing various portions of loan or money. Loan syndication most often occurs in situation
where a borrower may be outside the scope of a lender’s risk or exposure levels requires a large
sum of capital that my either be too much for a single lender to provide. Thus, lots of lenders will
working together and make teamwork to provide the borrower what they want, which is to full fill
their capital needed, at an appropriate rate agreed upon by all the lenders. Loan syndication
involves a large amount of coordination and negotiation. typically loan syndication involve a lead
financial institution , or syndicate agent , which organizes and administers the transaction ,
including repayments, fees , reporting and compliance and loan monitoring .

Most business in Malaysia that run money, will involve in syndicated loan. This is the best
way for them to run their business smoothly .Syndicated loan is the best services that bank produce
to easily their customer.
8.0 References

Ivashina, V., & Scharfstein, D. (2010). Loan syndication and credit cycles. American
Economic Review, 100(2), 57-61.

Gopalan, R., Nanda, V. K., & Yerramilli, V. (2007, November). Lead arranger reputation
and the loan syndication market. In EFA 2008 Athens Meetings Paper.