A syndicated loan is a loan provided by an association of a number of financial institutions that are grouped together in a banking syndicate to finance a given project or company.
Each establishment brings
- various types of funds (equity, public underwriting, porting of securities , long and short credits ),
- and / or techniques and tools for financial optimization of risks and costs, in particular using the financial derivatives market .
The grouping is usually coordinated by a leader ( agent ) who plays the role of financial engineer developing the general assembly, and who is in charge of the group’s relations with the funding recipient and negotiates the financial and financial conditions. guarantees (collateral).
The case of syndicated loans
When the operation is limited to the provision of credit by several banks , it is syndicated credit or syndicated credit and banking pool .
The participation of banks in the grouping is of two types: the participation in the financing in risk and cash (contribution of funds) and the participation in risk (if the customer is defective, the agreement defines the real share of the bank ). Participation in risk is not necessarily equivalent to the share of financing. The bank may agree to take more risk than its own share of financing, against additional compensation.
The additional remuneration of the lead bank is called a preciput cash (related to the fact that the participating bank does not participate in cash, the leader in charging him the cash, it’s taking to his account).