Business Overdrafts
Be financially flexible with a business overdraft.
Read time: 5 mins Added date: 21/11/2024
The UK remains one of the world’s most internationally connected countries. Its economy is the sixth largest in the world and is projected to continue in that position until 2050. This international outlook is reflected by its companies: 75% of the aggregate earnings of FTSE 100 firms are in foreign currencies, primarily the US dollar. And UK markets are truly global: around 42% of UK Gilts are held by overseas investors, a greater proportion than UK insurance and pension funds (Bondradar, 2022).
For the UK, the US and Europe remain key trading partners: the US is the UK’s single largest export market for goods and services while the European Union (EU) collectively represents 41.3% of all UK goods and services exports. Moreover, both are critical financing markets: as much as 94% of bond issuance by Lloyds Bank’s clients is denominated in US dollars or euro (UK Issuer DCM, Refinitiv Eikon (FY22)).
Lloyds’ goal is to facilitate these trade flows by helping its Corporate and Institutional Banking (CIB) clients gain access to markets wherever they do business. The bank does this by providing financial solutions and tools to manage risks and operate effectively. To connect the UK with the US and the EU, Lloyds is committed to extending its reach to grow its international franchise with a focus on US and European markets.
Global clients expect their banks to provide comprehensive funding and risk management solutions across a core set of competencies in key markets. Lloyds’ platform now fully reflects this, offering expertise across all its banking products, including secured and unsecured debt capital markets across the G3 currencies, supplemented by strong credentials in risk management products such as Rates, FX and Commodities.
To serve UK clients effectively and support trade flows, Lloyds has maintained a strong presence in both the US and Europe for more than a century; it has a full licence for risk management, financing services, and commercial banking in these markets; and is looking to further invest in talent and technology to enhance service delivery.
These capabilities work both ways. Lloyds has a long-standing corporate franchise in the US that actively leverages this approach to solving its clients’ global funding needs. For example, Lloyds has recently completed large, multi-tranche debt capital markets transactions in USD and EUR for General Motors (GM) and in USD and GBP for the Toyota Motor Credit Corporation. Looking forward, Lloyds is strategically growing the US client franchise both to enhance local capabilities and to leverage its strong capabilities in the UK and European markets.
As clients' needs evolve, so do Lloyds' capabilities. Another area of growth in the US has been in response to UK-based sponsors seeking opportunities to support the global transition to net zero, where Lloyds launched a renewable energy-focused project finance business a year ago. This business has been hugely successful in a short period of time, having supported over 15 projects across the Americas, and is expected to continue to grow materially.
Crucially, Lloyds is not only focused on outbound opportunities. Its strong domestic presence makes it a natural partner for global companies based in EU like Siemens Energy active in the UK market. Recently, the bank led a £500m syndicated sterling green hybrid financing for EDF.
Lloyds’ strategy in supporting clients across the UK, US, and Europe has three key features that set it apart from competitors.
First, the bank’s relationship banking model emphasises lending and access to capital markets through its strong debt capital markets and securitisation franchise, risk management capabilities, and transaction banking and trade solutions.
Second, Lloyds takes a holistic approach to client challenges, working seamlessly across products and regions organised globally with presence in the UK, US, and Europe. This ensures that the bank is always focused on achieving the best outcome for clients, irrespective of market.
Finally, the bank has deep expertise in key global sectors and geographies, allowing it to leverage resources for both outbound and inbound business, giving clients a competitive edge and access to tailored solutions.
These strengths, along with Lloyds’ commitment to expanding its UK, US, and European presence, provide clients with unique advantages, helping them navigate complex markets and manage risks effectively.
Article first published in Global Capital, October 2024.
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