X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

The U.S. signaled to banks that risky loans are okay. Lenders are now listening.

Goldman Sachs Group Inc. and Citigroup Inc. are among the banks that have doused companies with debt to an extent that would have been almost unthinkable a year ago, at least for a regulated bank. They’re piling loans onto corporations that are being purchased in leveraged buyouts, and when the dust settles, companies like health-care services provider Envision Healthcare Corp. could have total debt around 7.5 times a measure of earnings.

A year ago banks believed, with good reason, that regulators would view any ratio above six times as too high. Then in February of this year, government officials hinted that they were easing their enforcement of that guideline, and the entirely foreseeable came to pass. While average levels of indebtedness are only edging higher in acquisitions, leverage is jumping in the riskiest deals. Regulated banks are stepping into an area previously dominated by less-regulated foreign lenders and smaller investment banks.

Complete your profile to continue reading and get FREE access to CUTimes.com, part of your ALM digital membership.

Your access to unlimited CUTimes.com content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical CUTimes.com information including comprehensive product and service provider listings via the Marketplace Directory, CU Careers, resources from industry leaders, webcasts, and breaking news, analysis and more with our informative Newsletters.
  • Exclusive discounts on ALM and CU Times events.
  • Access to other award-winning ALM websites including Law.com and GlobeSt.com.

Already have an account?

 

Credit Union Times

Join Credit Union Times

Don’t miss crucial strategic and tactical information necessary to run your institution and better serve your members. Join Credit Union Times now!

  • Free unlimited access to Credit Union Times' trusted and independent team of experts for extensive industry news, conference coverage, people features, statistical analysis, and regulation and technology updates.
  • Exclusive discounts on ALM and Credit Union Times events.
  • Access to other award-winning ALM websites including TreasuryandRisk.com and Law.com.

Already have an account? Sign In Now
Join Credit Union Times

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.