Yank-the-bank clause (replacement of lender)

BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED 2026-11-06

// THE SHORT ANSWER

A yank-the-bank clause lets a borrower replace a lender in a syndicated or club facility, by requiring it to transfer its share at par to a new or existing lender, in defined cases. The usual triggers are a lender refusing a change that needs every lender's consent after the majority has agreed, a lender claiming a tax gross-up or increased costs, and a lender that has failed to fund its own commitment. It stops one holdout blocking an amendment the rest of the syndicate supports, and lenders negotiate how far it reaches and how much of the syndicate can be replaced.

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.