Syndicated loan
The administration of syndicated loans: legal and operational issues
By Charlotte GAUCHON25 March 2025Syndicated loans are an essential tool for financing large-scale projects. This technique makes it possible to spread the risk between several banks while ensuring harmonised credit management. The effectiveness of this mechanism depends on rigorous organisation and a clear definition of roles. 1. Centralised credit administration Role and legal nature of the banks' agent At the heart of the system is the banks' agent. The legal status of the agent has given rise to debate. Contrary to appearances, the agent is not systematically the representative of the participating banks. The Paris Court of Appeal has stated that "the obligations of the lead bank of a banking pool can only be those of an agent if the existence of an agreement entrusting him with such a mission is demonstrated" (Paris Court of Appeal, 3rd ch., sect. B, 21 Nov. 1990, Republic National Bank of New York v Crédit Industriel et Commercial de France). The agent occupies a position...
Legal classification of syndicated loans and sub-participations: a legal labyrinth
Syndicated credit, Credit and consumer lawBetween banking pragmatism and legal theories, syndicated loans and sub-participation transactions navigate a grey area. Their classification remains a headache for the courts and legal doctrine. Here is an overview of the debates and recent developments. 1. Syndicated credit: an elusive qualification A number of banks, a variety of...Syndicated loans: mechanisms and legal issues
Syndicated credit, Credit and consumer lawMajor property, industrial or infrastructure projects require colossal amounts of financing. A single bank can rarely take them on alone. This is where syndicated loans come in. Definition and typology of syndicated loans Definition and legal framework A syndicated loan is a transaction in which several banks join forces to grant a single loan....Bank sub-participation: a hidden risk transfer mechanism
Syndicated credit, Credit and consumer lawIn the world of structured finance, bank sub-participation operates in the shadows. Unlike direct syndication, where all the lenders sign the contractual documentation, this mechanism allows a bank to transfer all or part of its credit risk to other institutions, often without the borrower's knowledge. 1....
EN 
FR