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Bank lending on a syndicated basis as a way to step up investment lending of the Russian economy

Vol. 20, Iss. 46, DECEMBER 2014

Available online: 6 December 2014

Subject Heading: Banking

JEL Classification: 

Pages: 19-26

Il'ina E.V. Saint Petersburg State University of Economics, St. Petersburg, Russian Federation
ilina-ekaterina-v@mail.ru

The article states that a need for investment loans of large Russian companies significantly exceeds the capabilities of not only Russian, but also many foreign banks as they have limits in terms of the size of their own funds, credit risk limits established by the Bank of Russia, and internal limits. The structure of banks' liabilities with prevailing short-term resources also constrains lending activity of banks. To overcome these problems it is essential to develop syndicated lending. Syndicated lending implies lending of one or several borrowers by a group of banks. It enables to solve the contradiction between the needs of a borrower for large loans and impossibility to issue them by one bank. From banks' perspective, syndicated lending promotes credit portfolio optimization and diversification, risk distribution between a credit transaction participants and new large customer acquisition. From borrowers' perspective, it enables to accumulate the needed financial resources and provides a flexible mechanism of their use during project implementation. The author concludes that syndicated lending market development purports to become one of the key factors of growth of investment in modernization of the Russian economy production and overcoming its raw-material orientation on the basis of innovation. Therefore, it is necessary to solve all problems restricting bank's involvement in syndicated lending. To achieve this goal, the author suggests developing a regulatory framework of the syndicated lending market that would cover its primary and secondary segments. In addition, the banks should understand the strategic competitive advantages based on enhancing their interaction with the real sector of economy.

Keywords: lending, investment project, syndicated loan, loan syndication, credit risk, banks

References:

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  2. Burkova A.Yu. Rol' i znachenie agenta pri sinditsirovannom kreditovanii [A role and importance of an agent in syndicated lending]. Available at: Link. (In Russ.)
  3. Burkova A.Yu. Sinditsirovannoe kreditovanie v Rossii i za rubezhom: raznitsa dokumentatsii [Syndicated lending in Russia and abroad: difference in documentation]. Available at: Link. (In Russ.)
  4. Zalivako A.L. Strukturirovanie otnoshenii storon v ramkakh dogovora sinditsirovannogo kreditovaniya [Structuring parties’ relations under a syndicated loan agreement]. Available at: Link. (In Russ.)
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  7. Sorokina I.O. Osobennosti dogovornogo soprovozhdeniya sdelok sinditsirovannogo kreditovaniya [Specifics of syndicated lending transactions support]. Available at: Link. (In Russ.)
  8. Tikhomirova E.V. Bankovskii rynok korporativnykh kreditov Rossii [The Russian corporate loans market]. St. Petersburg, Saint Petersburg State University of Economics and Finance Publ., 2011, 259 p.
  9. Tikhomirova E.V. Kreditnye produkty sovremennykh rossiiskikh bankov [Credit products of modern Russian banks]. Finansy i kredit – Finance and credit, 2011, no. 29, pp. 44–50.
  10. Tikhomirova E.V. Rynok sinditsirovannykh kreditov: tendentsii i perspektivy razvitiya [The syndicated loans market: trends and development prospects]. Den'gi i kredit – Money and credit, 2011, no. 2, pp. 30–35.
  11. Armstrong Jim. The Syndicated Loan Market: Developments in the North American Context. Bank of Canada, Working Papers, 2003, no. 15.

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ISSN 2311-8709 (Online)
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