Best Arranger of Mid-Cap Loans – Commerzbank
Commerzbank has long been recognised as a leader in the mid-cap loans segment, building on its decades of experience with the German Mittelstand to serve clients from dedicated hubs in Frankfurt, London, Paris, New York and Hong Kong.
It is this experience together with its lending expertise that has given Commerzbank such leadership in this category, evidenced again last year by the bank recording the highest number of votes in GlobalCapital’s poll – the seventh consecutive year it has won this award.
Such attributes are important in any year, but rarely have they been as crucial as they were last year during the height of the global pandemic.
In fact, if there was one segment more at risk than any other, it was mid-caps, dominated by export-orientated businesses in engineering, chemicals and automotive sectors in markets across Europe.
“The pandemic disrupted international trade, global supply chains and economic activity around the world but hit certain sectors especially hard, including those that rely on international trade, logistics and travel,” says Reinhard Haas, global head of syndicate finance at Commerzbank in Frankfurt. “And as you would expect, oftentimes, smaller companies had fewer financial reserves to draw upon than larger ones.”
There was a sudden, immediate need for financial support. However, unlike in the 2008-2009 period, there was not a true liquidity crisis. “That was important because it meant that the banks were not the problem, we were part of the solution,” says Haas.
Commerzbank undoubtedly stepped up for its clients — working with hundreds of businesses to put financing in place — but what was key was the concerted effort of central banks, governments and the wider financial industry.
“Everyone contributed to buffering the effects of what could have been a much bigger crisis and Commerzbank is happy to have been able to contribute,” he says.
Much of the work in the mid-cap segment was focused on delivering government-backed finance schemes. In Germany, for instance, KfW ran two large programmes, one in which it participated alongside bank lenders, and one in which it provided guarantees. In other jurisdictions there were similar schemes, but everywhere there was a need to work alongside governments and with borrowers.
“We cooperated with government agencies across Europe, worked on the different public-aid programs available to our clients and negotiated documentary accommodations for the outstanding loans of many borrowers,” says Haas.
“Most importantly, we were able to draw on the very deep roots and long-standing client relationships we have in the mid-cap segment to create the necessary trust and cooperation to swiftly provide the necessary support.”
Commerzbank was well-prepared to accommodate the urgency of the situation, whether clients were active in syndicated loans, bilateral loans or Schuldscheine — a popular product among mid-caps — but Haas says he hopes lessons have been learned.
“We’ve seen through several crises that companies need a resilient financing structure and you shouldn’t be testing it in the middle of the emergency,” he says. “Syndicated lending is, for sponsors and corporates, the most resilient financing tool as it is adapted to the needs of the company and can change over time as circumstances evolve. That’s because it’s a relationship product.”
Haas says the pandemic has also prompted the industry to learn about the possibilities of moving traditional processes into the digital space. “It goes well beyond video conferencing: we’re talking about developing a digital ecosystem where we have the marketing phase, documentation and agency all in one place.”
Such changes will take time. What has been needed most immediately is traditional banking support. “Commerzbank is proud to have been the partner of choice to its mid-cap clients throughout the cycle and the fact that we have won this award for the seventh consecutive time is testimony to our commitment,” says Haas. GC