OT22082 - Interest and Financing

Lending Practice. Risk Control. Risk Spreading.

Using a purely illustrative example it may be possible to persuade a syndicate of eight banks to put up a total of $1bn to fund a project to the extent of $125m each. This does not mean that any one bank on its own would necessarily be prepared to advance $1bn. It is unlikely a third party would lend such an amount to a single borrower in this way as it might assume too great a risk in relation to the whole of the borrowers own business. In this example, it is therefore unlikely Oil Taxation Office will be receptive to an argument that a foreign parent company is acting reasonably in seeking to put $1bn on its own in a single loan into a UK subsidiary.