Ten financial institutions active in the syndicated loan business have agreed to support and test LoanReach, Euroclear Banks automated, multi-currency post-trade service for syndicated loan transactions. These institutions include, amongst others: BNP Paribas, European Credit Management Limited, Socit Gnrale, The Bank of New York Mellon and UBS Investment Bank. They have also volunteered to participate in a specialised working group, representing agents and lenders, created by the Loan Market Association (LMA).
LoanReach will be launched in three phases, with the first phase successfully launched in June 2008 encompassing:
– the allocation of unique loan identification codes, leveraging Euroclear Banks expertise as a national numbering agency;
– a centralised loan database, enabling loan agents to upload static and dynamic loan data; and
– agent and lender portfolio reporting systems.
“As a major service provider in the syndicated loan market, we are fully supportive of this initiative and are pleased to work with Euroclear Bank in the development of an automated solution for processing syndicated bank loans,” says James Maitland, managing director and EMEA corporate trust executive at The Bank of New York Mellon. “This initiative provides an opportunity to increase efficiency and reduce risks and costs for market participants, leading to greater transparency and liquidity in the loan market.”
“On a daily basis, operations departments are struggling to cope with the heavy manual and paper-based, back-office workload associated with loan processing. LoanReach has been launched in response to the Loan Market Associations request for greater post-trade efficiency and automation in the syndicated loan business,” says Olivier Grimonpont, director and head of product management for fixed-income securities and collateral services at Euroclear. “The service we offer will be the most comprehensive available in the market, providing features such automated reconciliation at facility and contract level, as well as DvP settlement. Through continuing market dialogue, including the LMAs working group, we aim to meet the evolving needs of the syndicated loan market with a range of integrated services unavailable elsewhere.”
“We welcome Euroclears initiative to provide a solution that streamlines the European syndicated loan business,” says Godfried De Vidts, director of European Affairs at the International Capital Market Association and chairman of ICMAs European Repo Council (ERC). “It strengthens the ERCs vision to make credit claims eligible for financing through repo agreements, not only for central bank trades, but also for bilateral trades.”
Starting in September, LoanReachs second phase will introduce a portfolio reconciliation service whereby lenders will also be able to upload information from their loan database, which will be reconciled with loan information provided by the agents. Towards the end of the year, an automated trade confirmation matching service, representing the industrys first step towards automated settlement for secondary market loans, and the lenders database will also be available to clients.
The final phase, completing the full launch of LoanReach, is scheduled for 2009 and will include DvP settlement for primary and secondary market loan trades, automated agent notices as well as collateral management services.
D.C.