Majority of the banks operate primarily as lenders, an increasing number of global banks are focussing on the attractive fees

and higher returns on capital that come from leading the syndication process. This process consists of the following sequential events : First the prospective borrower selects a lead arranger to advise and manage the syndication. In most cases the mandate is awarded based on competitive bidding among the borrowers principal relationship banks or other banks with relevant expertise. A time s, borrowers ask two or more banks to share the lead mandate to maximize the chance of a successful syndication or to rewards more than one bank with lead status and compensation. When funding certainty is critical , borrowers request fully underwritten bids, meaning the lead arranger commits to provide the full amount on specific terms and pricing.The alternative isd best efforts funds raising in which the lead arranger agrees to underwrite less than 100% of the loan and attempts to place the remainder in the bank market.

After awarding the mandate, the borrower and lead arranger execute a commitment letter that confirms the amount and terms of the financing, and specifies the arrangers duties and compensation.

The lead arranger then engages legal counsel to prepare an initial set of loan documents.At this point the lead arranger and borrower usually agrees on one of the two basic syndication strategy ( a single stage general syndication or the two stage syndication with sub under writing prior to general syndication.

The lead arranger structures the syndicate in tiers according to commitment amounts, set closing fees for each tier, and identifies which banks to invite to participate. The final step, known as general syndication, serves to distribute the loan to a group of invited banks that is large enough to commit the desired amount, but not so large as to create unattractively small loan shares or an unwieldly number of banks. Given this process,syndicated finance groups perform 2 key functions: structuring, which involves designing and negotiating deals with borrowers and distribution which involves selling deal into the bank market.