SBI top gainer from loan syndication

The increase in overseas borrowing, and merger and acquisitions by Indian corporates in 2007 has been a tidy earning opportunity for Indian banks.

State Bank of India jumped to the number one spot in the league table, in terms of fees earned from loan syndication in the Asia Pacific region (excluding Japan and Australia), according to Thompson Financial Freeman data.

The state-run bank was ranked fifth in 2006. ICICI Bank moved to the fourth position in 2007 from 24th last year.

SBI, India largest commercial bank, earned $35 million from fees. ICICI Bank made about $12 million. The total fees earned by league table banks in this region was $290.6 million in 2007.

Both SBI and ICICI Bank have witnessed an improvement in their market share as well. SBI's market share improved from 4.3 per cent in 2006 to 12 per cent in 2007, while that of ICICI Bank rose from 1.3 per cent to 4.1 per cent in the same period. SBI handled 64 issues and ICICI Bank managed 28 issues in 2007.

The focus on syndication fees is aimed at increasing the non-interest income. The pricing hinges on global factors and is market-driven and hence there are no domestic considerations, even if the client happens to be an Indian company, a senior SBI executive said.

With loan proceeds of $41.8 billion from 122 transactions, the Indian borrowers dominated the region's syndicated loan market in 2007, capturing a market share of 24.1 per cent.

This year marked the first time that Indian companies were more active in the regional loan market than their Hong Kong and Taiwanese counterparts.

The Asian (ex-Japan, ex-Australia) loan volumes reached record levels this year, with $197.4 billion raised from 769 issues. This represented an increase of 22.5 per cent from $161.1 billion garnered in 2006.

Global syndicated lending reached $4.5 trillion in 2007 from $4 trillion in 2006, representing an increase of 13.4 per cent, despite credit concerns in the second half of 2007.

Global M&A activity drove lending as acquisition financing (including leveraged buyouts) comprised 129.2 per cent of the overall activity in 2007.