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Joint Mandate Strategy for Bank Underwriting

Under this strategy, Chase and two other banks would jointly underwrite HK$1.1 billion each of the total amount for the client's deal. They would split the underwriting fees three ways. In the general syndication phase, Chase and the other two mandated banks would each be allocated HK$300 million, while four arrangers would receive HK$250 million each and six co-arrangers and five lead managers would get lower allocations of HK$150 million and HK$100 million respectively. This strategy allows Chase to share both the risks and fees with other banks, making the syndication easier by involving more prominent institutions. However, it also provides lower fees and lower risk for Chase than a

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59 views4 pages

Joint Mandate Strategy for Bank Underwriting

Under this strategy, Chase and two other banks would jointly underwrite HK$1.1 billion each of the total amount for the client's deal. They would split the underwriting fees three ways. In the general syndication phase, Chase and the other two mandated banks would each be allocated HK$300 million, while four arrangers would receive HK$250 million each and six co-arrangers and five lead managers would get lower allocations of HK$150 million and HK$100 million respectively. This strategy allows Chase to share both the risks and fees with other banks, making the syndication easier by involving more prominent institutions. However, it also provides lower fees and lower risk for Chase than a

Uploaded by

adtyshkhr
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd

Strategy 2: Joint mandate

Chase and 2 other banks would share a Joint mandate and a joint underwriting commitment, but they would skip the subunderwriting phase The mandated banks (coordinating arrangers) would each underwrite HK$1.1 billion of the total amount and split the underwriting fee 3 ways The final allocations in the general syndication would be: Chase and the 2 other mandated banks at HK$300 million each 4 arrangers at HK$250 million each 6 co-arrangers at HK$150 million each 5 lead managers at HK$100 million

RISK AND RETURN TRADE OFF:


1. Commitment to underwrite the full amount( General Syndication) Exposed the bank to greater risk; sought senior mgmt. approval This proposal would: show Chases support for the client, signal its confidence in the deal, and Provides greater profit for the firm. It might also set Chase apart from other banks that were unwilling to underwrite the deal and

increase the probability of winning a sole mandate deal


Greater syndication risk and credit risk if deal is undersubscribed.

2. Having underwriting: Chase shares the risk Chase shares fees also with other banks Involving more banks and especially prominent banks as lead arrangers or underwriters facilitate syndication Low fees and low risk

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