Agency fee
What is an agency fee in a syndicated loan, and what does the agent do for it?
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BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED
// THE SHORT ANSWER
An agency fee is the annual fee a borrower pays the agent bank of a syndicated or club facility for administering it: passing drawdown requests and payments between borrower and lenders, calculating interest, circulating compliance certificates and other information, and running lender votes on waivers and amendments. It is usually a fixed sum agreed in a separate fee letter and kept by the agent rather than shared with the syndicate, and a security agent or trustee may charge its own. The agreement usually describes the agent's duties as mechanical and administrative: it does not judge the credit for the other lenders.
BASIS Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.
// WORKED IN
// NEXT TO IT
- Commitment fee
- Break cost
- Margin ratchet
- Line fee
- Establishment fee
- Risk-adjusted return on capital (RAROC)
- Risk-based pricing
- Credit margin
- Cost of funds
- Default interest
- Prepayment fee (early repayment fee)
- Sustainability-linked margin
- Interest rate floor (on a loan)
- Bank bill rate (BKBM / BBSY)
- All-in rate (all-in cost)
- Funds transfer pricing (FTP)
- Wallet share
- Utilisation fee
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