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BNP Paribas Ratchets Up Nordic Loans Business After Bond Rout

BNP Paribas Ratchets Up Nordic Loans Business After Bond Rout

(Bloomberg) -- BNP Paribas SA has spent the past few weeks dramatically expanding its Nordic presence in corporate loans after a Covid-19 panic in bond markets left borrowers looking for other kinds of financing.

Eirik Winter, the chief executive of BNP Paribas in the Nordics, says his bankers have provided “40 to 50 new liquidity facilities” worth “billions of euros” over the past four weeks in the form of loans and revolving credit facilities. That compares with “less than a handful, if any” a year ago, he said.

With economic activity grinding to a halt and domestic bond markets closed to all but a handful of issuers, companies across the Nordic region are flocking to banks to provide the cash the market won’t.

For BNP Paribas, recent deals include a 980 million euro ($1.1 billion) revolving credit facility it helped arrange for fashion giant Hennes & Mauritz AB.

Winter says the development will “probably lead to more market share in other areas.” He also says some of BNP Paribas’ international rivals in the Nordics have now “become much more cautious in Europe as a result of the crisis.”

Last week BNP Paribas reported a surge in the cost of risk due to the Covid-19 crisis. The closely watched measure of credit costs jumped to 67 basis points of gross loans in the first quarter, up from 38 basis points a year earlier, analysts at Moody’s Investors Service said.

For now, clients are only using the facilities “as an insurance,” Winter said.

The income generated helps make up for lost revenue elsewhere as areas like mergers and acquisitions suffer a lull, Winter said. He doesn’t expect much M&A activity over the next six months, but says there’s still “a pretty big pipeline.” And then there’s the wave of consolidation that’s likely to shape some of the hardest hit sectors, like aviation.

For the roughly 800 people working for BNP Paribas’ Nordic business, Winter says he “can’t remember a time when we’ve been busier than we are now.”

Read More:
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  • Companies Plan $60 Billion of Bank Loans to Ease Virus Impact
  • Swedish Banks ‘Overloaded’ With Loan Enquiries: Riksbank Survey
  • Nordic Corporates Flock to Bank Loans as Bond Market Wobbles

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