Strength in numbers recommended for smaller sector players
Small and medium-sized banks could join forces to successfully bid for large syndicated loans, according to two bankers.
Wing Hang Bank chairman Patrick Fung Yuk-bun said by combining, these banks could bid for larger loans, which were often borrowed by larger and stronger companies.
Small banks have been either excluded from larger deals or allowed to join only at lower levels - meaning they can take only a small share and have little say on the terms.
Mr Fung said when small banks united they could behave like an investment bank and play the role of a lead arranger.
The group could be more pro-active in conducting due diligence and negotiate better terms.
The Bank Consortium Trust (BCT) was formed in June by 10 small and medium banks to create a stronger capital base and a larger distribution network to participate in the potentially lucrative Mandatory Provident Fund business.
BCTC founder and chairman Bernard Charnwut Chan said five member banks had expressed interest in co-operating to tap the syndicated loan market.
'Using the BCTC model, we can improve our economy of scale. That demonstrates that we don't really need to have mergers or consolidation of any kind to achieve the same objectives,' Mr Chan said.
BANKING
