Middle-office operations under pressure: adapting to evolving loan syndication demands

Published on September 4, 2025 by Katelan Morris

The agency middle office must be a well-oiled machine to be able to service the expanding syndicated loan market and the resulting administrative workload – a team that can dive into business right away, eliminating the burdensome tasks of coordination and communication, calculations and workings, monitoring of milestones, amendments and compliance, to name a few. A team that has an operational risk mindset and domain expertise and that understands the importance of accountability and ownership. This team will help you expand your footprint in the syndicated loan market and provide you with first-class expertise in navigating the challenges that come with it.

Overview

As interest rates eased in 2024, global credit cyclicality resulted in a favourable low-cost environment in commercial lending. This was evident in the syndicated loan market, which expanded to USD1.2tn in 2024 from USD1.06tn in 2023 and is expected to grow further, amounting to a forecast USD1.93tn in 2028 at a CAGR of 12.7%.

Lender participation has expanded, sometimes to even over 100 members per deal across borders to spread the risk, allowing for diverse lender profiles. A greater focus on customer centrality has also modernised the flexibility of these loans.

While these growth opportunities are lucrative, they also place significant pressure on agency middle-office functions of loan operations (loan ops) teams. The attention is on the middle office to ensure seamless end-to-end processing throughout the loan lifecycle with “minimum to no” friction, although this is easier said than done given the countless risks to be cautious of and the consequences if not proactively managed.

This blog explores the challenges of agency middle-office processes for syndicated loans and the need for a streamlined ecosystem within a controlled framework.

Challenges in agency middle-office operations

The primary intricacies of syndicated loans are that there is still no central platform connecting all parties for a single source of truth, and there is still significant reliance on manual processing in the absence of sophisticated programmes tailor-made for loan ops due to their complex nature. Hence, it is difficult for banks to make transformational changes in their operations alone, and they would hesitate when it comes to scaling up in agency roles for these products.

Challenges in agency middle-office operations are often present across four common pain points:

1. Need for streamlined processes and efficient data management

Syndicated loan agreements are vastly technical and differ from each another. As lender participants increase with several risk thresholds, so does the documentation process throughout the loan lifecycle, to cover as many data points as possible at a more granular level so that all interests are protected. Data becomes very unstructured and reconciling these volumes so that only relevant and accurate information is updated requires a significant amount of scrutiny.

This is even more challenging in cross-border deals that involve different jurisdictions requiring timely and accurate submissions; this is a laborious task during peak volume periods. There is also a higher frequency of exception reporting in cases of missed/incorrect documentation for which the loan ops teams would need to invest additional effort and separate tracking until these have been cleared.

Mismanaged processing and weak controls threaten data integrity. This harms crucial loan ops during fund allocation and fee distribution. Failure to ensure that accurate data is captured in systems owing to these inefficiencies leads to significant repercussions if not handled with tight control.

2. Need for robust coordination and clear communication

Dealing with multiple lenders entails balancing several conflicting interests; this leads to misunderstandings and delayed decisions if not handled efficiently, especially from loan booking to coordinating closing dates and until loan closure. There is also a higher frequency of in-life servicing activities such as deal modifications, rate fixings and restructures for volatile borrowers. These crucial situations, where timely lender approval for any change to the loan is required, should be actively managed. Furthermore, information regarding borrower updates or changes to the loan are to be communicated to lenders with utmost care and cannot be fitted into a standard template.

These are instances where manual intervention is still required on the part of agent banks when acting as a gateway between other syndicated lenders and the borrower. Coordination also becomes challenging internally between front-, middle- and back-office teams when complex deal structures do not fit into existing operational controls/systems and requires additional manual effort.

Communication is still via email/calls and often followed up with several reminders during delayed decisions for more active responses. While this is viewed as a tedious task, it is still a vital part of the middle-office function.

3. Difficulties in digitisation and integrating with legacy systems

Although banks continue to invest in advanced technology for automation, the returns are still modest and with low straight-through processing rates. Digitisation in banks is a complicated investment and often requires incremental costs thereafter for system updates and changes. While there is a preference for vendor platforms over proprietary ones, banks often struggle to integrate advanced loan management systems with their own legacy platforms, further increasing the risk of data inaccuracy and requiring more effort for remediation and system migration-related issues. Any delay due to such inefficiency results in high system downtimes and harms productivity.

The threat of data leaks and cyberattacks are other pressing issues that loan ops teams should be mindful of. As digital platforms become more sophisticated, staff are expected to stay up to date with system developments and the importance of data protection when using these systems.

4. High level of attrition in domain expertise and talent

Loan processing for syndicated loans requires domain expertise and skilled professionals who can navigate different and complex financial markets, loan agreements and regulations, as these support the overall streamlined process. Failure to invest in this would lead to the other challenges mentioned above. Hence, a responsive team that understands the sensitivities of data integrity and timely processing is vital. Retaining loan ops talent is a challenge, according to research conducted by McKinsey in 2024. It found that attrition rates ranged from 20% to 70% across US-based loan ops staff. Burdened by this, banks would need to incur high costs for rehiring and upskilling over a lengthy learning curve until new hires are of the optimum standard. Until then, there would be added pressure on existing staff to handle the capacity constraints; this threatens the quality of processing, as there is more room for error and the high probability that such errors go undetected.

Consequences and the need of the hour

It is noteworthy that any operational inefficiency and inaccuracy in loan processing, even of a minute scale, has the potential to create a domino effect of repercussions. Operating models become complicated as syndicated loans scale up in volume, and the chances of irregularities falling through the cracks are high. Failure to capture these early on would spill over to larger external issues, affecting an agency bank’s relationships with other lenders, borrowers and, eventually, the regulatory authorities. Ultimately, confidence in the bank’s ability to operate as agent would be threatened, as evidenced in the court case that involved Citigroup acting as agent for Revlon’s syndicated facility in August 2020. A payment of approximately USD900m was inaccurately wired to Revlon’s syndicated lenders instead of the USD8m in interest payments that was originally intended, resulting in significant irrecoverable financial losses owing to weak middle-office controls.

Therefore, it is crucial for middle offices to ensure that a controlled framework is in place, prioritising a leaner but risk-mitigating model throughout the loan lifecycle. The need of the hour is, thus, a “plug and play” team, highlighting the importance of experts to ensure that transparency, accuracy and accountability are reflected within a streamlined ecosystem able to adapt to market pressures.

How Acuity Knowledge Partners can help

We provide sophisticated bespoke solutions in lending ops, enabling clients to reduce their cost-to-serve ratios and prioritise value-added transformation. Our team consists of experts with years of experience in lending operations and financial products and sectors. We promote a culture of continued learning and are dedicated to upskilling our team members by means of regular training programmes, tailored for overall growth and individual client requirements.

We maintain a strong focus on compliance and ensure that all tasks are performed in line with our proprietary standards of operating procedure (SOPs) structured based on regulatory and client guidelines. Quality checking and progress tracking ensure that controls are in place for seamless support.

Our wealth of knowledge and experience in a number of advanced loan management systems enable us to be platform-agnostic, and we deliver efficient solutions that help clients with complex system migration.

We are committed to expansion and innovation as we grow with our clients. Our excellence lies in streamlining complex loan operations within a controlled framework and ensuring that we are with our clients every step of the way.

Sources:

• Syndicated Loans Industry Forecast Report, 2024-2028 & 2033 – Major Companies Focusing on Advancing Solutions to Offer Trading Protocols, Real-Time Data, and Analytics

• Old dog, new tricks: The evolution of syndicated loan markets | White & Case LLP

• Citigroup cannot recoup Revlon payouts after nearly $900 million gaffe: U.S. judge | Reuters

• How banks can boost productivity through simplification at scale | McKinsey

• Modernizing syndicated-loan operations | McKinsey

• Navigating the Perils and Pitfalls of Syndicated Lending: Crucial Insights for Co-Lenders – Lucosky Brookman LLP

• Lending Operations Outsourcing | Acuity Knowledge Partners

---

---