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New body to police African loan standards

Johannesburg - The major South African banks (ABSA, Investec, Nedbank, RMB and Standard Bank), together with Norton Rose, have recognised the need for a regional loan market association that will provide recommended standards for loan documents used for syndicated financing in Africa.

The African Loan Market Association (ALMA) will be formally launched in Johannesburg on Thursday (September 29), with the support of the Loan Market Association (LMA) in London.

Steven Gamble, a director of Norton Rose and a member of the ALMA board, says the timing is right for an association of this kind.

"As Africa weathers the recession comparatively well, and major financing opportunities emerge across the continent, financial institutions need to facilitate a growing number of transactions as quickly and professionally as possible.

"The ALMA will align syndicated lending in Africa with global best practice, making financing more efficient and transparent, reducing risk, and generally improving the overall syndicated lending environment."

ALMA members will include local and international financial institutions, banks, law firms and other stakeholders in the financial markets in Africa. In addition to being able to access LMA-type documentation structured for the African market, members of the ALMA will also be offered dedicated training and interaction with a dynamic network of professionals operating in this key market.

Globally, several non-profit associations serve the syndicated markets in various regions. These include the LMA which covers the Europe, Middle East and Africa region, and the Asia-Pacific Loan Market Association (APLMA) which serves the broader Asian market. Both associations enjoy reciprocal honorary membership of the ALMA.

LMA director Mike Johnstone said: "I wholeheartedly welcome the emergence of the African Loan Market Association. The LMA in Europe, the APLMA in Asia, and the LSTA in the USA have all seen steady growth in membership over recent years, underlining the importance and effectiveness of trade bodies in regional markets.

"The regional associations cooperate closely with each other across a spectrum of activities such as lobbying and education, ensuring a global approach whenever appropriate. The addition of the ALMA will add to this global effectiveness. We look forward to a long and productive relationship."

Darrenth Hawken, head of business development (Europe, Middle East and Africa as well as Asia) at Thomson Reuters-Loan Pricing Corp (Hong Kong), notes that besides standardising the approach to primary and secondary documentation, the ALMA will also encourage the dissemination of expert knowledge and know-how across the continent.

"The African growth story can be fully realised with greater knowledge sharing and improved quality of available financial information. By facilitating standardisation of loan transactions and best practices across the different jurisdictions, the ALMA will be a positive contributor towards the African market's continued growth.

"The positive impacts of these practices was something already seen in Asia with the Asia Pacific Loan Market Association."

The ALMA aims to provide a comprehensive suite of syndicated loan documents adapted for the SA market and to offer simplified English law, Nigerian law and Kenyan law documentation for use elsewhere in Africa. In the long term the ALMA will promote the development of a local secondary market for loan sales and trading.
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