New BOL Regulation on Syndicated Loans

On 9 April 2026, the Bank of the Lao PDR (“BOL”) issued Decision No. 310 on Syndicated Loans (the “Decision”), which regulates syndicated loan facility lending arrangements.

The use of syndicated loan facilities is not new in the Lao PDR; in fact, the BOL’s Decision on the Scope of Lending by Commercial Banks No. 1062 dated 3 November 2025 (“Decision 1062”) expressly refers to the practice of co-lending and co-financing arrangements.

What is a syndicated loan?

The Decision defines a syndicated loan as a financing arrangement in which two or more commercial banks, or commercial banks together with other financial institutions, jointly provide a loan facility to a borrower under a single loan agreement.

Roles in syndicated loan facility arrangements

Syndicated loan financing arrangements typically involve a lead bank, an agent bank, a security agent, and other participating lenders, each of whom contributes a specified portion of the total facility amount.

• Lead bank: This is the commercial bank that leads the syndicated loan arrangement, which is responsible for receiving, reviewing, and negotiating the borrower’s financing request, and for inviting other financial institutions to participate in the syndicate.
• Agent bank (or correspondent bank): This is the commercial bank appointed to administer the facility, including disbursing the loan, coordinating the execution of the loan agreement, and receiving principal, interest, and other charges from the borrower on behalf of the syndicate.
• Security agent (or security bank): This is the commercial bank appointed by the syndicate to act as the agent for holding and managing the security interests, including collateral and mortgages, on behalf of the lenders.

In practice, the lead bank may also assume the role of the agent bank or the security agent, and the agent bank may also act as the security agent, depending on the structure agreed among them.

When are syndicated loan arrangements used?

The Decision requires commercial banks to arrange a syndicated loan facility to provide financing to a borrower where a borrower’s loan request exceeds the lending limits prescribed under the relevant regulations, which are understood to refer to Decision 1062.

Under that decision, the lending limits are defined with reference to Tier 1 Capital, whereby (i) credit exposure to a single borrower must not exceed 25%; (ii) aggregate exposure to a group of related borrowers must not exceed 50%; and (iii) total exposure to major borrowers must not exceed 500% of Tier 1 Capital.

However, the Decision does not expressly prohibit a commercial bank from entering into a syndicated loan arrangement for loans that fall within such prescribed limits. Accordingly, syndicated lending may still be undertaken on a voluntary basis, even where the exposure remains within the applicable threshold.

Key syndicated loan documents

A term sheet is usually prepared to outline the key facility terms agreed in principle by the lead bank and the borrower. This is shared with other banks or credit providers to use when considering whether to join the syndicated loan arrangement. The key information provided in the term sheet includes the following:

• The borrower’s general information and financial position
• Details of the security provider(s) (if any)
• Facility amount, tenor, interest rate, and applicable fees
• Type and structure of the security
• Repayment and prepayment terms
• Overview of the project, including market analysis and projected cash flow
• Key risks and proposed mitigation measures
• Conditions precedent to the initial disbursement
• Borrower’s obligations and restrictions (covenants)
• Events of default
• Project approvals and relevant environmental assessments/approvals (if any)
• Any other terms, as may be required

Once a syndicate is formed, the members must enter into a syndicated loan agreement containing, at a minimum, the following:

• Details of the lenders, borrower, and security provider (mortgagor)
• Definitions and interpretations
• Background and purpose of the financing/project
• Key credit terms, including loan amount, interest rate, currency, maturity date, repayment structure for principal and interest, and applicable charges
• The proportion of each lender’s participation and the funding schedule
• Payment and collection arrangements
• Financial and non-financial covenants
• Type of security, and provisions for its management and enforcement in the event of default
• The rights and obligations of the lead bank, agent bank, security agent, and participating lenders
• Risk allocation and dispute resolution mechanisms
• Monitoring and reporting requirements, both prior to and following disbursement

In addition to the above, a loan agreement and related security documents are typically entered into with the borrower, and may be executed either by all syndicated lenders or by a duly authorized representative acting on their behalf.

Approvals required to participate in syndicated loan arrangements

Foreign financial institutions participating in syndicated loan facilities in the Lao PDR must obtain approval from the Bank Supervision Department of the BOL, with the domestic lead bank submitting the application and supporting documents on their behalf. In such cases, the borrower is not required to obtain separate approval from the BOL for offshore borrowing.

The Bank Supervision Department will review the application within 30 days of receipt of a complete submission and, if the application is rejected, will notify the applicant in writing, stating the reasons for such rejection.

Similarly, commercial banks in the Lao PDR must obtain prior approval from the same authority before participating in syndicated loan facilities abroad.

VDB Loi has extensive experience with project finance transactions in the Lao PDR, including advising and assisting major commercial banks and international financial institutions in structuring and extending loan facilities.

Should you have any questions regarding the above Decision, or require assistance in structuring a syndicated loan, including drafting the term sheet and syndicated loan agreement, please contact the undersigned or your usual VDB Loi adviser.