After a steep increase in the volume of syndicated loans around the world last year, the sector is facing a sharp slowdown in 2001 as global economic activity eases and last year's frenetic pace in mergers and acquisitions comes to a dramatic halt. The market slowdown is forcing bankers to look to new areas beyond the financing of mergers and acquisitions to keep their syndicated lending profits from sagging far below last year's lofty levels.

David Bassett, managing director of Citigroup's loan syndication business, says: 'Banks last year and over the last couple of years became almost spoiled by the number of M&A financing opportunities. There isn't as much financing as was available last year, and you still have managers telling bankers to deliver 10% to 20% growth in the business this year. It's a difficult situation, and we've seen quite aggressive bidding to chase deals now that we wouldn't have seen last year.'