The Westpac Banking Corp logo is displayed inside a bank branch as a pedestrian walks past in Melbourne . Westpac grabbed a 14% share as loan deals climbed 8% to $90.2bn in the year through December 20 , while ANZ handled 13.9%, according to data compiled by Bloomberg . Bloomberg Sydney Westpac Banking Corp is poised to end Australia & New Zealand Banking Group's three-year reign as the biggest arranger of syndicated loans, after rising competition forced the rivals to slash borrowing costs. Westpac grabbed a 14% share as deals climbed 8% to $90.2bn in the year through December 20 , while ANZ handled 13.9%, according to data compiled by Bloomberg . The market failed to recover after a 26% slump in 2012. Competition helped cut the average interest rate premium 81 basis points this year, compared with a 23 basis point drop in the rest of the Asia-Pacific region outside Japan . "All transactions are being very aggressively chased," said Gavin Chappell , Westpac's Sydney -based head of loans and syndications. "The market is in a very competitive place at the moment. I don't think that competitive dynamic is going to change next year." Westpac and its competitors are being forced to cut rates and loosen lending terms to secure business as the end of a mining boom slows the economy, while a resurgent US debt market tempts their customers overseas. Companies can expect to bargain even more benefits in coming months as banks focus on competing on terms instead of margins, according to ANZ. "Next year we'll have quite a lot of liquidity, not a lot of demand," said Sean Joseph , ANZ's Sydney -based head of loan syndications for Australia . "So it's probably going to be a good time to be an issuer and harder to be a lender." Origin Energy and AquaSure, the builder of a water plant in the state of Victoria , led syndicated loan deals in Australia , borrowing about 13% of the total, according to Bloomberg -compiled data. Companies syndicated $83.4bn of loans last year when two liquefied natural gas projects accounted for 24%, the data show. ANZ helped arrange the most syndicated loans in the three years from 2010-12, with Westpac coming third last year, behind National Australia Bank , Bloomberg -compiled data show. The nation's four largest lenders, which includes Commonwealth Bank of Australia , helped arrange 54% of local deals this year through December 20 . "League tables are probably a good indication of the fees they get for transacting up front," said Brian Johnson , a Sydney -based bank analyst at CLSA . While the rankings detail the lenders' origination activity, banking models have evolved and much of that credit is sold on, he said. Rivalry and lower funding costs have slashed the average interest margin on Australian loans to 228 basis points more than the benchmark rate in 2013, compared with 309 basis points last year, according to data compiled by Bloomberg . Origin trimmed costs by as much as 50 basis points on the year's biggest loan in August while AquaSure more than halved rates when refinancing a A$3.7bn ( $3.3bn ) facility in October, according to people familiar with the matters. Other companies that locked in lower costs this year were AMP, Australia's largest life insurer and pension manager, in August and farm chemical supplier Nufarm in October. Margins are unlikely to fall much further unless funding costs do similar, ANZ's Joseph said. Spreads on local banks' bonds may only have the capacity to fall another 10 basis points in the next six months, according to Michael Bush , NAB's head of credit research in Melbourne . NAB, which is rated AA- by Standard & Poor's, paid 88 basis points more than the benchmark rate for its own funding in a A$1.5bn five-year note issue last month. At the same time, Australian banks are receiving about 165 basis points to 170 basis points more than the benchmark for five-year loans to BBB- rated clients, Joseph said. The Reserve Bank of Australia's decision to cut its benchmark lending rate by 225 basis points since November 2011 to a record low 2.5% has helped buoy the domestic economy even as the fillip provided by a mining investment boom begins to wane. Governor Glenn Stevens last week said the board has kept an "open mind" on whether to cut rates further as it sees signs low borrowing costs are supporting spending. Australia's 10-year government bond yield has climbed 102 basis points this year to 4.29% at 5pm in Sydney on December 20 . The nation's dollar bought 88.80 US cents, down 14.7% since December 31 . Westpac forecasts growth in syndicated deals to remain subdued in 2014, at between A$75bn and A$90bn , in the absence of the major energy and mining projects which have dominated demand for the last two years, said Chappell. "We expect acquisition-related transactions and public- private partnerships and infrastructure deals to plug that gap to some extent," he said. This year's volumes may get a last-minute boost if Gina Rinehart completes the financing of her A$10bn Roy Hill mine and port project in west Australia's Pilbara region by December 31 . Asia's richest woman is seeking about A$7bn from export credit agencies and banks, and the four biggest lenders are expected to join, said people familiar with the matter. Roy Hill , seeking a record debt package for Australian mining, may be the last of the jumbo resources-based loans for some time. As banks seek to maintain revenues, companies are likely to enjoy even more elbow room on terms, even as the US Federal Reserve ends its unprecedented stimulus. "As the ability to generate more benefits for clients from margins diminishes, we'll start looking at other ways to support our clients," said ANZ's Joseph. "So we might see banks offering lower commitment fees and more flexible terms and conditions, whether it's covenant holidays or other things that we haven't seen in the last three to five years, banks will try to differentiate themselves."
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