Foreign banks pushed out of African syndications

Author: Danielle Myles | Published: 30 Apr 2013
African syndicated lending, by lender region
Credit date % non-African bank volume of total
2005 90.5
2006 81.1
2007 84.4
2008 77.7
2009 75.3
2010 79.4
2011 80.9
2012 63.4
2013 (YTD)
Courtesy of Dealogic

The rise of local banks has contributed to foreign lenders’ sliding participation in syndicated lending in Africa. Standard Bank’s investment banking head has warned this trend will continue.

Stringent diligence policies, plus less flexibility to depart from Loan Market Association (LMA) documents and tailor mechanisms such as cash waterfalls to satisfy local law requirements, continue to place European and US banks at a competitive disadvantage.

Statistics reveal that non-African banks’ market share in local syndications steadily declined from 90.5% in 2005 to 63.4% in 2012, with South African banks increasingly acting as arrangers, and other bank sectors becoming stronger through consolidation.

"The biggest...