How structural shifts in bank lending across Asia Pacific are creating a $10M–$100M corporate financing gap and why private credit has become the answer for operating companies, CFOs, and their advisors.
Published by
Donald Klip | Co-Founder, Global Mortgage Group | Head, GMG Capital Advisory
30 years of institutional finance. Former hedge fund founder. Senior roles at top global investment banks. GMG Capital Advisory arranges private credit and special situations finance of $10M–$100M for operating companies across Asia Pacific.
[email protected] | +65 9773 0273 | Singapore · Hong Kong | Asia-Pacific
Across Asia Pacific, a quiet but significant shift is underway in corporate lending. Operating companies that have maintained strong banking relationships for years profitable businesses with real assets and solid track records are finding that their banks can no longer serve them in the way they once did.
Facilities are being reduced. Renewals are being complicated. New credit requests are being declined. And in most cases, the businesses affected are doing nothing wrong. The problem is not on the borrower’s side of the table.
I have spent thirty years in institutional finance as a hedge fund founder, structuring transactions at the world’s top investment banks, and building cross-border lending operations across Asia Pacific. I have watched credit cycles from both sides of the table. What is happening right now to mid-market corporate borrowers across the region is structural, not cyclical. And most business owners and CFOs do not yet fully understand why.
When a bank pulls back from a creditworthy corporate borrower, the problem is almost always on the bank’s balance sheet, not the borrower’s.
Why Banks Are Pulling Back: The Regulatory Reality
Banks do not lend from a limitless pool of capital. Every corporate loan they make consumes regulatory capital, a financial buffer they are required by law to maintain against potential losses. When the cost of holding that capital rises, the economics of lending change fundamentally.
Since 2022, banks across Asia Pacific have faced a convergence of pressures that have made corporate lending to mid-sized operating companies significantly less attractive:
- Rising capital requirements under Basel III and Basel IV, increasing the regulatory cost of every corporate loan on the balance sheet
- Higher risk-weightings applied to commercial and corporate credit, making these loans more expensive to hold than retail mortgages or government securities
- Heightened scrutiny of non-performing loan ratios following post-COVID stress, prompting conservative provisioning across commercial loan books
- Margin pressure pushing banks toward higher-yielding retail products, wealth management, and large institutional mandates
- Sector and geographic concentration limits restricting new lending to entire industries or markets regardless of individual borrower quality
None of these pressures relate to the creditworthiness of individual corporate borrowers. They are systemic constraints reshaping bank lending behaviour across the entire region.
The Corporate Lending Gap: Why $10M–$100M Is No Man’s Land
- Below $5M: The SME segment. Government-backed schemes, fintech lenders, and standardised bank products compete actively. Options are plentiful.
- Above $100M: The institutional segment. Syndicated loan markets, bond markets, and dedicated corporate banking divisions serve this tier. Capital is available.
- $10M to $100M: No man’s land. Too large for SME products. Too small to justify the full cost of a corporate banking relationship. Too complex for automated underwriting. Increasingly, too capital-intensive for a bank under tightening regulatory constraints.
A Timeline of Tightening
2020–2021: The COVID Accommodation
Central banks flooded markets with liquidity and regulators temporarily relaxed capital requirements. Banks were incentivised to lend broadly, including to borrowers that would not have passed pre-crisis credit committees.
2022: The Inflection Point
As inflation surged and central banks reversed course aggressively, the credit environment shifted with unusual speed. Banks began repricing risk, tightening covenants, and reviewing facilities approved under pandemic-era assumptions.
2023–2024: Structural Recalibration
Basel III finalisation timelines accelerated across major Asia Pacific jurisdictions. Mid-market corporate credit, high origination cost, high capital consumption, moderate yield became the first category to be deprioritised.
2025: The New Baseline
What looked initially like a cyclical tightening has proved structural. Banks have reorganised credit functions, raised minimum deal sizes, and redirected corporate banking resources toward larger, more profitable mandates.
The bank that served your business well for ten years has not changed its view of you. It has changed its view of the corporate lending market you operate in.
Market by Market: How the Tightening Is Playing Out
- Singapore: MAS-regulated banks have prioritised wealth management, trade finance, and large institutional mandates. Mid-market corporate credit is increasingly declined or routed to specialist subsidiaries with longer timelines and more restrictive terms.
- Australia: The big four banks have systematically reduced commercial lending appetite following the Banking Royal Commission. Corporate borrowers outside major metros face particular difficulty.
- Malaysia: Bank Negara Malaysia’s tighter provisioning requirements have pushed domestic banks toward government-linked corporations. Independent operating companies face longer credit timelines and higher collateral demands.
- Indonesia: Foreign-owned businesses face structural lending barriers regardless of credit quality. Domestic banks apply significant risk premiums to international entities.
- Thailand: Bangkok-headquartered banks dominate with limited appetite for foreign-owned or regionally-structured operating companies. Approval processes are slow and collateral frameworks inflexible.
- Philippines: Family-controlled banking conglomerates prioritise affiliated corporate groups. Independent mid-market businesses face limited credit options.
- South Korea: The chaebol-dominated banking system allocates the majority of corporate credit to large conglomerates. Mid-market independents are structurally underserved.
- Taiwan: A large and internationally active manufacturing and technology base is chronically underfunded by domestic banks.
- Japan: Foreign-owned businesses face significant structural barriers to domestic bank credit. Keiretsu banking relationships are effectively closed to outside participants.
- India: Post-NPA crisis provisioning requirements have constrained mid-market corporate lending significantly. Foreign-owned and internationally structured businesses face additional barriers.
Where Corporate Capital Has Moved: The Rise of Private Credit
As bank lending to mid-market corporates has contracted, private credit has grown substantially. Private credit assets under management in Asia Pacific exceeded $150 billion in 2024, having more than doubled over five years.
Private credit lenders operate outside the Basel regulatory framework that constrains banks. They can structure transactions that banks cannot, move faster, accept broader collateral packages, and serve corporate borrowers systematically deprioritised by the banking system.
This is the thesis behind The Debt Desk. Private credit in Asia Pacific is not a last resort for distressed borrowers. It is a structural financing solution that sophisticated corporates, CFOs, and their advisors are increasingly treating as the first call rather than the fallback.
What This Series Covers
- Chapter 1 — The Corporate Lending Gap: The structural forces driving bank credit tightening and how private credit is filling the gap
- Chapter 2 — Deal Types Decoded: Bridge finance, acquisition funding, working capital, recapitalisation, rescue finance, and refinancing
- Chapter 3 — Market Guides: Country-by-country private credit intelligence across 14 Asia Pacific markets
- Chapter 4 — Industry Verticals: Sector-specific financing solutions across 11 industries
- Chapter 5 — The Borrower’s Playbook: What to prepare, what drives pricing, how to approach a lender
- Chapter 6 — GMG Perspective: Market outlook, trends, and the macro case for private credit in Asia Pacific
If you have a corporate financing requirement right now, do not wait for the series. Contact us directly.
About GMG Capital Advisory
Donald Klip | Co-Founder, Global Mortgage Group | Head, GMG Capital Advisory
Donald Klip has 30 years of institutional finance experience spanning hedge fund management and senior roles at the world’s top global investment banks. GMG Capital Advisory specialises in arranging and structuring corporate debt financing of $10M–$100M for operating companies, asset owners, and project sponsors where conventional bank lending is unavailable, insufficient, or too slow. We operate across 23+ jurisdictions in Asia Pacific.
www.gmg.asia | [email protected] | +65 9773 0273 | Singapore · Hong Kong
The Debt Desk
Corporate private credit intelligence for Asia Pacific’s $10M–$100M middle market. Published by GMG Capital Advisory. Part of the Private Credit Asia content series.
www.gmg.asia | Read all 41 articles in the series
