The Bank of Credit and Commerce International (BCCI) had wholly-owned merchant banking operations in Hong Kong and the Cayman Islands, and in Kuwait through affiliates acting like combined investment banks and private equity firms.
The Merchant Banking Division as part of BCCI Central Support Office (CSO), Central Office, in London, United Kingdom, provided central professional expertise, including advisory and investment services, to major clients, institutions as well as high-net-worth individuals, from all parts of the world.
Some of the key services provided by the Merchant Banking Group were:
- Investment & Portfolio Management
- Project Financing
- Trust Services
- Financial Packages
- Loan Syndication
- Guarantees Syndication
- Feasibility Studies
Each of the regional Merchant Banking operations centres had evolved its own broad range of services in keeping with prevailing banking laws and market requirements.
The Merchant Banking Division in the BCCI Central Office London emphasised investment advisory services that covered portfolio investments, corporate acquisitions, and real estate investments. A broad range of other financial advisory activities included the management of client funds in keeping with the clients' priorities regarding safety, yield, and liquidity and on a small scale the participation in project finance syndications on a world-wide basis.
In 1984 BCCI took a major step in the first successful issue of Guaranteed Floating Rate Notes for US$50 million towards subordinated capital.
The issue was structured by BCCI FINANCE NV in the Netherland Antilles that was a tax haven and an attractive offshore base for western banks.
The notes that guaranteed payment of principal and interest by BCCI after seven years when the notes matured in 1990, were listed on the Luxembourg Stock Exchange.
In order to make a public issue, BCCI complied with stringent regulatory requirements. The prospectus presented a complete statement of BCCI's history and its operations, its subsidiaries, affiliates, and audited accounts, along with the list of its shareholders.
- Guaranteed Floating Rate Notes due 1990 Payment of principal guaranteed by BCCI Holdings (Luxembourg) SA: Announcement December 1983
- Guaranteed Floating Rate Notes due 1990 Payment of principal guaranteed by BCCI Holding (Luxembourg) SA: Prospectus 22 November 1983
Bank of America, a previous shareholder of BCCI and continued dealing with BCCI, and London and Continental Bankers who had dealings with BCCI as well, agreed jointly to lead manage the $50 million Floating Rate Notes Issue. The two lead managers joined 15 institutions financial as co-managers to underwrite the issue.
The issue was important for BCCI in two ways. The success of the issue of the notes meant that BCCI was able to tap a new source of funds if required. But, more important than the initial sum itself, the success of the issue and the speed in which the notes were underwritten favourably reflected the standing and reputation that BCCI already had in the international financial community.
