JP Morgan’s chief executive Jamie Dimon’s warning, in his annual letter to shareholders, that the cost of providing committed undrawn revolving credits, trade finance and standby letters of credit could rocket has once again highlighted the heavy losses that banks are taking to give clients cut-price loa
Syndicated lending in EMEA fell to US$140bn in the first three months of 2014. This was the lowest first-quarter volume since 2004, as the market suffered from a fall in refinancing, the continued absence of large-scale M&A financings and increased competition from the buoyant bond and equity markets.
Banks desperate to win business are trying to preserve the illusion of higher loan pricing by including “first-draw” fees on the interest margins of undrawn revolving credits that will never be used, but which reduce the commitment fees that borrowers have to pay.
- External risks threaten developing market growth
- France: Utilities tap for cheap refinancing
- Italian borrowers eye early refinancing
- Borrowers drawn to equity markets
- Investment-grade pricing remains under pressure
- Commodity traders take advantage of low pricing
- IPOs help generate new loans