Categories: Loans

US Lenders Cautious About Making European Loans Amid Pandemic

Banks in the U.S. are taking a cautious approach when it comes to extending loans to businesses in Europe, according to the Financial Times.

The coronavirus pandemic has caused big banks like JPMorgan, Goldman Sachs and Bank of America (BoA) to reduce the size of loans or cancel funding talks.

“We are increasingly observing an ‘America first’ attitude among large U.S. banks,” an adviser with direct involvement in bank negotiations with German corporates told FT in a Friday (April 24) report. “…there is a clear pattern.”

JPMorgan ended discussions regarding an additional credit line for Germany’s BASF, which is the biggest chemical company in the world, according to sources engaged in the transaction. BoA extended a loan to Adidas that was 50 percent smaller than the six international banks that loaned the sportswear behemoth 3 billion euros ($3.25 billion) backed by the state.

Goldman Sachs opted out of a 12 billion-euro ($13 billion) facility for Germany’s Daimler, which caused other banks to take care of the entire loan amount.

“Every bank is under the cosh of its national regulators, who in times of crisis show a huge home bias,” said Jan Pieter Krahnen, director of the Center for Financial Studies at the University of Frankfurt, according to FT. “This heavily influences risk management and regional exposure, which comes at the expense of clients abroad.”

European regulators have noticed the trend of retreating U.S. lenders, but a senior supervisory official told FT that they can’t “force them to lend.”

BoA, Goldman Sachs and JPMorgan maintain they have upped global lending in recent weeks. BoA indicated that even though its syndicated loans are down, it ranked second in league tables of euro-denominated bonds.

JPMorgan pointed out that 50 percent of more than $25 billion in new credit to European businesses.

“Our commitment to companies in the region remains unwavering,” it said, according to FT.

U.K. government officeholders and companies have chastised financial institutions for requiring personal guarantees for emergency loans that are backed by the state.

Get our hottest stories delivered to your inbox.

Sign up for the PYMNTS.com Newsletter to get updates on top stories and viral hits.

——————————

New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.

Recent Posts

Trump’s WeChat Ban Could Rock The US Consumer Landscape

President Donald Trump has issued two executive orders in two days banning two Chinese behemoths from operating in America –…

1 hour ago

US DOJ Charges 14 With $28M In PPP Fraud

The U.S. Department of Justice (DOJ) charged 14 people in two separate investigations into their alleged participation in schemes to defraud the…

4 hours ago

Digital IDs For Online Bowling, Voice Commerce, Apple’s Mobeewave Deal Top This Week’s News

Top News Apple Buys Mobeewave for $100M Apple has purchased Canadian company Mobeewave, which will allow it to create mobile…

5 hours ago

TikTok ‘Shocked’ By Trump’s Executive Order

In its first public statements about President Donald Trump’s executive order to ban TikTok, the Chinese company said it is…

5 hours ago

Microsoft, Facebook Express Frustration With Apple’s Gaming App Policies

Microsoft and Facebook are grumbling publicly about fellow tech giant Apple's policies restricting access to coveted slots in its App…

6 hours ago

Mercari’s Revenues Pop 48 Pct For FY2020, But Losses Also Grow

Mercari, the Japanese shopping platform that allows users to buy and sell almost anything, reported its net sales surged nearly…

7 hours ago