ANNUAL REVIEW

Banking & Finance 2013

June 2013  |  BANKING & FINANCE

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Financier Worldwide canvasses the opinions of leading professionals around the world on the latest trends in banking & finance.

 

UNITED STATES

Sarah Ward

Skadden, Arps, Slate, Meagher & Flom LLP

Continuing the trend in 2012, the US leveraged loan market has been extremely active in the first half of 2013, as borrowers have taken advantage of favourable pricing and terms amid strong investor demand. The 2013 YTD leveraged loan issuance is now slightly below $500bn, of which institutional loan issuance has totalled $338bn, or two-thirds, compared to $124bn in the same period last year.”

 

CANADA

Robert Olsen

Deloitte

The Canadian credit market is strong. According to statistics compiled by Bank of Canada, over the first four months of 2013, total business credit grew by 7.7 percent year-over-year. Canadian banks have also shown a good lending appetite as evidenced by a 12.2 percent increase in short-term business credit and an increase of 8.3 percent in long-term business credit for the period.”

 

MEXICO

Ramon Bravo Herrera

Barrera, Siqueiros y Torres Landa, SC

Financing to private companies in Mexico as a percentage of GDP is one of the lowest in the world. Financing to the private sector represented 26.2 percent of GDP as at December 2012, the global average is around 60 percent and the OECD’s average is above 80 percent. Also, as of December 2012, bank financing in Mexico represented 46 percent of the banks’ assets. This is lower than many other Latin American countries such as Brazil, Argentina and even Guatemala.”

 

ARGENTINA

Juan M. Diehl Moreno

Marval, O’Farrell & Mairal

Currently, the main risks that challenge banking and finance activity are economic and regulatory in nature. In the last few years, but particularly in 2012, the Argentine government has imposed a number of controls and new regulations that limit the framework for action for banking and finance activity. For example, the modification of the Capital Market Law includes an upgrade of the regulation on ‘distribution of profits’ of financial entities and there are also significant modifications in the rules regarding the ‘Financing of (the) public non-financial sector’.”

 

UNITED KINGDOM

Phillip B. Slater

Reed Smith LLP

Financing activity appears to be on the increase – though I say that guardedly as we have heard it before in the last couple of years and it has only proved to be true for short periods of time. Liquidity for corporate borrowing transactions feels less tight although much of this liquidity is coming from alternative finance providers, which is bringing with it a need to step outside the tried and tested boundaries of mainstream bank finance, both in terms of pricing structures, covenant packages, and mix and match between cash flow lending and asset backed lending.”

 

GERMANY

Peter Memminger

Milbank

The banking and finance market has been reasonably active in Germany over recent months, with the overall lending situation becoming much better when compared to the situation approximately two years ago. While even two years ago large, reputable corporates had been able to get corporate credit, even on a large scale, with no significant problems, this has now further improved with credit margins coming significantly down and with such credits becoming available again to medium-sized companies – though some still argue that this does not yet happen.”

 

RUSSIA

Grigory Marinichev

Gide Loyrette Nouel

We have witnessed positive movements in banking and finance activity and credit growth generally, as well as continued stimulus for spending. This has, in our view, enabled Russia to exceed economic and financial development expectations. The banks are certainly demonstrating a strong appetite to lend. Foreign banks are facing strong competition from the Russian state banks and from the bond market which seems to have recovered.”

 

UKRAINE

Olexander Olshansky

Sayenko Kharenko

In recent years, the growth of the Ukrainian banking sector has slowed considerably. Pre-financial crisis, many international banking groups entered the Ukrainian market, mostly by purchasing majority stakes in local banks. That trend has now reversed, and Western banks are selling their Ukrainian assets en masse. At the same time, a number of Russian banks are maintaining a strong presence in the market via their subsidiaries.”

 

INDIA

Narayan Iyer

Talwar Thakore & Associates

It is fair to say that the Indian economic story has lost some of its shine this past year. A lower than expected result on GDP, the general economic scenario globally, and the challenges of a coalition government have had a dampening effect on financing transactions. That said, we have seen an increase in instructions on cross-border structured trade finance deals, infrastructure project related financings, promoter stake increases and debt capital market transactions in India.”


CONTRIBUTORS

Barrera, Siqueiros y Torres Landa, SC

Deloitte

Gide Loyrette Nouel

Marval, O’Farrell & Mairal

Milbank

Reed Smith LLP

Sayenko Kharenko

Skadden, Arps, Slate, Meagher & Flom LLP

Talwar Thakore & Associates


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