These problems don t seem to have dampened BofA s appetite, however. And syndicated loans haven t been the only problem. The bank s marketing material claims BofA has a relationship with three in every 10 middle-market companies. Vandiver argued that the market has proved unable to accommodate BofA s exposures. The margin on lending has shrunk, he said, placing all the emphasis on models if a bank wants to hold loans on the balance sheet a dependency he was not comfortable with.
Analysts accept that the market has crimped the bank s ability to dispose of problem debt.
The secondary market for loans is there to some extent, says David Spring, Chicago-based director in the financial institutions group at Fitch IBCA, but it may not be large enough for someone like BofA . This somewhat parochial approach to the credit decision might have been passable for the super-regional Nationsbank, but is arguably less useful to the colossal new Bank of America. Vandiver himself professed pride in the way that risk management played out during and after the merger. We came out of the merger with a risk management system that works, he maintained. We did not spend a year working out how to do it and what to do.