The State of Lending to Large Corporations

July 1, 2010
Industry Trends
Global, Asia-Pacific, EMEA, Latin America, North America

Abstract

Although banks are still short on extending loans, large corporations are already looking at their recovery.

In this report, The State of Lending to Large Corporations, Celent finds that large corporations are no longer willing or able to wait for credit offices of banks to make lending decisions. They are opting for alternative sources of funding.

While banks are reshaping their business models, they also have to look at technology in a new light. Automation is not the value proposition moving forward. The large financial institutions’ need to consolidate requires systems integration and aggregation of data, all to be transformed into intelligent information.

“One of the most significant traces of the rearrangement of bank relationship policies is corporate treasurers’ demand for banks to show more entrepreneurial behavior and be willing to support lending policies typical of an investment bank,” says Enrico Camerinelli, Senior Analyst with Celent’s Banking Group and author of the report.

This report examines the options of alternative funding sources available to large corporations (i.e., what corporate clients want) and assesses the functionality a corporate lending management system must have to support the bank in servicing its large corporate clients.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

3

Quick Check of the Status of Corporate Lending

5

 

Europe

5

 

US

6

 

Asia

7

How Large Corporations Generate Liquidity

8

 

Corporations Are Diversifying Their Funding Sources

9

 

A Source of Corporate Funding: Bond Markets

11

 

A Source of Corporate Funding: Islamic Finance

13

 

The Case of the IFC Hilal Sukuk

14

 

A Source of Corporate Funding: Unrated Bonds

17

 

A Source of Corporate Funding: EU

22

Technology

24

 

Automating Treasury Operations: Where’s the Value?

24

 

Risk Management

27

 

From Automating Operations to Integrating Systems

28

 

The Reasons Behind a Lending Management Platform

29

 

Analytics to Mine the Information

33

 

Workflow Management

35

 

SOA

36

What Banks Must Do

38

 

Basel III

39

 

Syndicated Lending Hit by the Financial Crisis

41

Conclusions

45

Leveraging Celent’s Expertise

46

 

Support for Financial Institutions

46

 

Support for Vendors

46

Related Celent Research

47

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