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Fewer Faucets But A Lot More Pipes

As banks merge, loan syndicates find new flows of money from non-banks

By Staff Writer | Updated on February 01, 2004

Of all the battles faced by treasurers and CFOs, obtaining credit is one of the most basic. And it’s a battle in which the ground has shifted a great deal in recent years as the banking industry underwent steady consolidation, eliminating many credit providers. As one bank gobbles up another, corporate credit groups lose members. When two banks that are both in a company’s lending group merge, the combined entity is unlikely to offer the company a commitment equal to what the banks had provided previously, says Steven Bavaria, head of Standard & Poor’s Corp.’s loan rating business. “It’s always less, sometimes quite a bit less.”

In the coming months, the number of big banks is expected to shrink even more, given the merger plans already announced between Bank of America and FleetBoston Financial, and J.P. Morgan Chase and Bank One, as well as additional mergers suspected to be on the drawing boards.

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