Research On Legal Matters Of Protection For Interests Of Participating Banks In International Syndicated Loan

The international syndicated loan involves mutiple parties and complex legal nexus. Although the international syndicated loan activities have a history of more than 50 years, related legal regulations are still far from mature due to the variety of legal conventions in different countries as well as the international financial hierarchies. More importantly, a uniform legislation is lack for the international syndicated loan markets. To help in solving this problem, efforts have been made world-widely. The United Kingdom and the United States are precursors for these efforts. The United States, in particular, have had positive progresses in legal matters of protection for interests of member banks participating in the international syndicated loan. In this thesis, the exploration and analysis of this sort of legal protection are based mainly on lessons and experiences obtained from trials in UK and US.There are three major issues concerning the legal protection for interests of participating banks in the international syndicated loan: the prevention of credit risks in advance, the default made by borrowers and the relevant remedies to lenders, and how to use the securities law for further remedies. For the first issue, building a complete system for management of credit risks and avoiding possible default activities from the borrowers are fundamentally important. How to apply the management of credit risks to the international syndicated loan markets is not easy. Taking the two major current models– the Japanese one and the US one– into account, we would prefer the US model to be used though it needs further improvements. The solutions for remedies in response to borrowers'default have been well developed in international syndicated loan contracts and legal systems in different countries. The studies on these solutions need to be flexible and correspondent to the various requirements. For application of the securities law to international syndicated loan, relevant theories and practices are critical, in which the US have had good progresses. Analyzing the US-style regulations based on the securities law could contribute greatly to the efforts that are being made in China for similar purposes.From a legal point of view, the purpose of our study is to have a systematic analysis of the legal protection for interests of participating banks involved in international syndicated loan and to address possible effective solutions. Firstly, the basic legal relationships among all parties involved in the international syndicated loan should be well analyzed. Secondly, an appropriate system for credit management to the borrowers needs to be proposed to protect interests of the lender banks. Afterwards, the remedies before and after default acts need to be studied according to practical contracts for international syndicated loan. Last but not least, the participating banks should make good use of the securities law, more than the remedies, to obtain effective protections after the occurrence of default acts.The syndicated loan in China is still in early stages and relevant legal regulations are still far from enough. In China, few legislations orientating syndicated loan have been made available; the effectiveness of current regulatory laws is still in a low level; the current rules are not detailed; and there are still lots of aspects in need of integration with world-wide conventions. Therefore, analyzing experiences and taking lessons from the developed countries are necessary for us to improve our legal protections for member banks involved in international syndicated loan. In this thesis, multiple methods are addressed, in association with shortcomings of the Chinese legal system, for potential application in our country to deal with possible risks during the syndicated loan acts and to protect the participating banks.This thesis tries to offer some beneficial suggestions and assistance for China's commercial banks to further develop syndicated loan, prevent and control credit risks, protect Chinese banks'interests in international syndicated loan, and reduce losses from legal risks by the way of analysing successful lessons from UK and US in protecting interests of participating banks.