Lender Replacement Provision (Yank-a-Bank)
A lender replacement provision, commonly called a yank-a-bank provision, allows a borrower to require a specified lender to assign its loans and commitments to an eligible replacement lender when contractual conditions are met.
Replacement provisions solve holdout and funding problems
A single lender can create friction if it refuses a widely supported amendment or fails to fund.
Rather than leaving the entire facility dependent on that lender, the agreement can let the borrower replace the position with another institution willing to assume the obligations.
Non-consenting lenders are a common trigger
When an amendment requires more than ordinary majority consent, a lender that withholds consent can sometimes be designated a Non-Consenting Lender.
Replacement is generally available only if substituting that lender would actually allow the amendment to become effective.
The lender is usually paid out, not stripped of value
Current 2026 agreements require payment of outstanding principal, accrued interest, fees and other specified amounts when the position is assigned.
The provision changes who holds the loan. It does not ordinarily permit the borrower to confiscate the lender's existing claim.
Defaulting lenders can also be removed
A borrower may replace a lender that failed to fund or otherwise meets the Defaulting Lender definition.
This restores a functioning lending group and can eliminate fronting or voting problems caused by the defaulting institution.
Yank-a-bank provisions can convert a consent problem into an assignment problem
Assume an amendment needs consent from lenders holding 90% of a class because of the affected terms. Lenders holding 95% agree, except one institution with 5% that refuses.
If the credit agreement permits replacement of a Non-Consenting Lender, the borrower can locate an eligible assignee willing to buy the holdout's loan and consent to the amendment. The outgoing lender receives the contractually required payment, and the replacement lender steps into the position.
The borrower has not overridden the holdout's vote directly. It has used an agreed assignment mechanism to change who holds the voting claim.
Common mistakes
Treating yank-a-bank as a free borrower option Replacement requires a contractual trigger.
Assuming the agent must find the new lender Agreements commonly state the agent has no obligation to do so.
Ignoring assignment economics The outgoing lender generally must be paid the amounts required by the agreement.
Example
A proposed amendment needs the Required Lenders and all directly affected lenders. One lender refuses while the other necessary lenders consent. If the agreement treats that institution as a Non-Consenting Lender and permits replacement, the borrower can arrange an eligible assignee to purchase its position at the required amount and complete the amendment.
Example
A proposed amendment needs the Required Lenders and all directly affected lenders. One lender refuses while the other necessary lenders consent. If the agreement treats that institution as a Non-Consenting Lender and permits replacement, the borrower can arrange an eligible assignee to purchase its position at the required amount and complete the amendment.
Professional note
Yank-a-bank is market shorthand, not the operative legal term. The real rights come from the replacement section, which should be checked for triggers, notice periods, payment requirements, assignment conditions and limits on partial replacement.
Related terms
- Debt Commitment Letter
A debt commitment letter is an agreement in which lenders or arrangers commit, subject to stated terms and conditions, to provide debt financing for an acquisition or other transaction.
- Required Lenders
Required Lenders are the lenders holding the contractually specified percentage of loans, commitments or exposures needed to approve many amendments, waivers, directions and other collective lender actions under a credit agreement.
- Defaulting Lender
A Defaulting Lender is a lender that meets one or more conditions specified in a credit agreement, commonly including failure to fund required loans or participations, failure to make required payments, repudiation of funding obligations, or specified insolvency-related events.
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