M&A: fantasy panacea for lenders

Loans desks are going to fall woefully short of budget expectations this year, in part because management puts so much faith in M&A bolstering volumes. This is folly.

  • By GlobalCapital
  • 13 Nov 2018
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Loans bankers across the EMEA region are expecting to post figures 20% to 30% below budget this year, an alarming shortfall given that the natural ebb and flow of the loans business is largely fairly easy to predict.

In June this year, for example, German vehicle maker Daimler signed an €11bn five year deal to refinance existing debt. That facility came with extension options potentially putting the maturity to seven years.

It does not take an economics degree to recognise that the company will not want to raise another €11bn loan next year, except in the most extraordinary of circumstances. So it doesn’t make sense to meaningfully include the possibility of an €11bn loan to the company in next year’s budget.

Apply this across all new loans signed this year and take a look at what deals are likely to mature or approach a reasonable early refinancing stage in any given period. A boring task, certainly, but one that will give a clear indication of what sort of amount will realistically be required of loans desks. 

But if it’s so easy to forecast, where does the missing 20% in lenders' budgets come from this year? A large part of it is down to bosses relying on M&A activity coming through —  although any loans banker worth their salt would rather rely on the London Underground running on time than big ticket M&A transactions regularly landing on their desk. 

Loans bankers are fully — and as we come to the end of the year, increasingly vocally — aware that the nature of M&A means it is just too opportunistic and elusive to depend upon with the regularity required to properly budget a loans division. But the chunky shortfall in budgets heavily implies that the higher-ups at lenders are nonetheless relying on large scale M&A activity to hit targets.

It’s a paradox in thinking that isn’t doing anyone any favours. 

Even when big M&A does come along, budgets will be met more by dumb luck than the business nous of a loans desk, making them a pointless performance indicator while tied so intricately to event-driven transactions.


  • By GlobalCapital
  • 13 Nov 2018

Global Syndicated Loan Volume

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 JPMorgan 32,121.03 52 15.79%
2 Bank of America Merrill Lynch 24,156.98 67 11.87%
3 Mizuho 9,935.55 34 4.88%
4 MUFG 9,041.37 66 4.44%
5 Citi 8,308.84 31 4.08%

Bookrunners of Middle East and Africa Loans

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 MUFG 766.21 2 8.47%
1 First Abu Dhabi Bank 766.21 2 8.47%
1 BNP Paribas 766.21 2 8.47%
1 Abu Dhabi Commercial Bank PJSC 766.21 2 8.47%
5 Standard Chartered Bank 409.06 1 4.52%

Bookrunners of European Leveraged Loans

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Credit Agricole CIB 484.94 3 17.32%
1 BNP Paribas 484.94 3 17.32%
3 SG Corporate & Investment Banking 194.57 2 6.95%
3 HSBC 194.57 2 6.95%
5 Natixis 174.13 2 6.22%

Bookrunners of European Marketed Syndicated Loans

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Bank of America Merrill Lynch 6,045.16 4 18.58%
2 BNP Paribas 1,742.18 7 5.36%
3 Credit Agricole CIB 1,539.94 8 4.73%
4 MUFG 1,257.24 4 3.87%
5 SG Corporate & Investment Banking 1,165.08 6 3.58%

Syndicated Loan Revenue - EMEA

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • 18 Apr 2016
1 HSBC 35.45 69 6.71%
2 BNP Paribas 31.67 78 5.99%
3 ING 31.21 74 5.90%
4 Citi 22.60 36 4.27%
5 Deutsche Bank 21.89 32 4.14%