The Analysis Of The Legal Risks Of International Syndicated Loan And Relevant Market Practice Of China

With China’s admission to WTO and acceleration of the development of global financial markets, the domestic market of syndicated loan has been active since the beginning of the 21 st century. The syndicated loan has been adopted in a large number of key projects, however, compared to European and American countries, the proportion of syndicated loans in newly increased loans business is still very low, for the reason of limits in the process of marketization, unperfected market rules, unformed market environment, which is still in the primary stage of infrastructure projects in which the syndicated loans have been adopted to finance the project. In recent years, with the promotion of the syndicated loan market and the establishment of regulatory and self-regulatory system, the improvement of market conditions, the principal of "cooperation, development and win-win policy" and diversification of risk, the syndicated loans have been applied in many fields, which also has grabbed the attention of financial institutions. Since 2005, for the purpose of liquidity management, there has been a certain amount of inter-bank syndicated loan transactions, which forms the situation of the prosper market. Despite the global financial crisis in 2008, the market of syndicated loans has been gone through rapid growth by leaps and bounds. However, regulatory and legal system of the international syndicated loans needs to be further improved. In the project which adopted international syndicated loans, both borrower and financial institutions, as the lender, shall recognized the risk of the project in which the international syndicated loan has been adopted, and gradually improve the system of risk control.The writer has adopted research method to analysis, such as logical deduction, rules analysis and empirical analysis. The paper focused on the international syndicated loans, that is to say the legal risk and relevant resolution of the international syndicated loans. In addition to the part of abstract and conclusion, the structure has been divided into five chapters, which contains more than 37,000 words.First, the part of introduction, from the aspect of the purpose and significance of choosing the title of the paper, has been focused on the impact of international syndicated loan for China’s financial market, and, with the application of syndicated loan in projects, the existing risk and deficiency of the legal and regulatory system, which leads to discussion for the following parts. Second, a brief discussion on the following issues which presented by other books:(1) the legal risk of the international syndicated loans in the course of establishment;(2) the main legal risks of international syndicated loans from the international law perspective;(3) the legal risks of security used in the syndicated loans and the impact of new regulations on cross-border security; and(4) brief analysis and recommendations on China legal system and regulatory system. Finally, backgrounds of writing the paper have been further elaborated in this part.The first chapter has focused on the origin, development, and the definition of international syndicated loans. Based on the analysis, the definition of the syndicated loan shall be: “A syndicated loan is a loan made by two or more lending institutions, on similar terms and conditions, using common documentation and administered by a common agent”2. In the rest part of chapter one, the feature and classification of international syndicated loans has also been further analyzed, which has made pavement for the rest chapter of the thesis.The second chapter is mainly focused on the legal risk of the international syndicated loans during the course of its establishment, which includes risk types(including but not limited to the credit risk of borrower and lead bank) and relevant solution to the risk as mentioned in this chapter.The third chapter is mainly focused on the legal risk from the perspective of international law which has influence on the international syndicated loans, with respect to foreign exchange control and Basel III. With respect to foreign exchange control, based on IMF Agreement, this part mainly demonstrate the relationship between the regulation prescribed by the member of IMF with IMF Agreement(form the aspect of current account and capital account), and then, from WTO perspective, focused on its relationship between the IMF Agreement with relevant regulations prescribed by WTO, which also encourage the corporation with IMF with respect to foreign exchange control. The last part of this chapter is focused on the risk control regulated by Basel III which influences the regulations of many countries. Basel III has further prescribed that banks shall take more attention on the capital adequacy ratio.The fourth chapter focused on legal risk generated by security used to secure syndicated loans in the course of establishment and fulfillment of the security. Due to such risks, the writer proposed a solution for such problem in that part of this chapter. In the rest of the chapter, despite the new regulations of cross-border guarantee promulgated in June 2014, which relaxed the process of cross-border guarantee, and focused on post-review, but to the extent, due to the policy of establishment of cross-border security of local authorities, the procedure of the establishment of security used for syndicated loans remains to be further liberalized by local authorities of PRC.The fifth chapter elaborated the main regulations and system of China with respect to syndicated loans. Firstly, writer has analyzed the deficiency in such system, and then proposed relevant solutions to the deficiency. In the final part of the chapter, writer has elaborated the new development of syndicated loans involving ABS business, and looking forward to the prosperity of the syndicated loan market.