The results of the most recent Greenwich Associates survey reveal that companies around the world are looking to a few select banks, including regional, national and local banks, to supplement credit and other services previously obtained from now-troubled financial institutions.
Greenwich Associates asked the 638 companies participating in the survey to name the banks with which they do business with or know well and to assess how their banks’ handling of market turmoil over the past six months has affected their reputations. Companies were also asked how recent market events and the performance of the banks they use will affect the amount of business they expect to do with individual banks over the next six months on an overall basis, and in capital markets and cash management specifically.
“Our research findings suggest that the number of banks that have benefited most from government guarantees and capitalizations will see the most meaningful reductions in business,” says John Colon, Greenwich Associates consultant. “Companies are wary of over-dependence on these banks, and the banks themselves are rebuilding balance sheets and trying to avoid loan losses. These conditions are hardly conducive to the rapid increase in lending hoped for by regulators and politicians. Over the near term, several banks that are in position to significantly increase lending are local and regional banks that have managed their balance sheets conservatively. These banks have a unique opportunity to gain market share and assume a larger role in corporate credit markets.”
In fact, the shift in corporate banking business from global to local providers appears to be intensifying as the world’s biggest financial firms face new political pressures that make international lending more difficult.
“Most of the big banks in the United States and the United Kingdom have accepted capital from government bailout programs and they are now under intense pressure to step up lending at home,” says Robert Statius-Muller, Greenwich Associates consultant. “Right now, there is little incentive for these banks to extend credit to companies outside of their home markets and it is becoming increasingly hard to operate as an international bank.”
D.C.