Quote from ljyoung:
This is an article from the folks at Risk Center which some of you might find of interest:
February 25: Industry Risk - Amid Crisis, a Select Group of Banks Improve their Standing with Large Companies
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Location: New York
Author: Jeanine Canneto
Date: Wednesday, February 25, 2009
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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 banksâ 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.
âOur 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,â says Greenwich Associates consultant John Colon. âCompanies 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.â
In fact, the shift in corporate banking business from global to local providers appears to be intensifying as the worldâs biggest financial firms face new political pressures that make international lending more difficult. âMost 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,â says Greenwich Associates consultant Robert Statius-Muller. âRight 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.â
United States
At the top of the very short list of banks that have burnished their reputations among corporate clients in the United States as a result of their handling of the financial crisis are U.S. Bancorp and PNC Bank â regional banks that have not experienced write-downs of the magnitude that brought many larger institutions to their knees. As a result, corporate clients expect to increase the amount of business they do with both banks on an overall basis and in cash management in particular. Also poised to pick up new business in coming months from companies in the United States are J.P. Morgan, which still stands as one of the few banks that has improved its standing among its corporate clients as a results of its actions during the credit crisis, Wells Fargo/Wachovia and a handful of foreign banks including Deutsche Bank, Scotia Capital, Bank of Tokyo-Mitsubishi UFJ, and HSBC are also expected to see an increase in business from large U.S. companies.
Europe
Nowhere has the reputation of the banking industry as a whole suffered more among large companies than in Europe. Every major bank competing in the region saw its reputation take a hit among corporate clients over the last six months, with two exceptions: Nordea and Banco Santander. The performance of these two banks illustrates the progress made by regional banks that avoided the worst of the global credit crisis while larger competitors struggled. Also in this camp are banks like BBVA and Svenska Handelsbanken, whose reputations among corporate clients have held up much better than those of most pan-European and global banks. While significant proportions of the corporate clients of global and pan-European banks say they will reduce the amount of business they do with these institutions in the next six months, companies on a net basis say they expect to increase the amount of business they do with the likes of Nordea, SEB, BBVA, Svenska Handelsbanken, Banco Santander, Danske Bank, and other smaller European banks. The survey results reveal that many of these banks can expect to increase their share of client âwalletâ in capital markets and cash management.
BNP Paribas and HSBC are the expected beneficiaries among the larger global banks in the eyes of corporate clients, despite some minor losses in reputation associated with the ongoing financial crisis. Existing clients say they expect to increase the amount of business they plan to do with both banks over the next six months.
Asia
In Asia, the list of banks that have seen their reputations improve among corporate clients amid the volatility of the past six months includes the State Bank of India and Indiaâs HFDC.
Chinese banksâ reputation appears mostly unaffected by the crisis. Among the regionâs larger corporate banks, only Standard Chartered improved its reputation among companies over the period. By gaining the respect of clients in these difficult conditions, these banks appear to have positioned themselves to increase their market share.
Forty percent of companies that are clients of OCBC say they expect to increase the amount of business they do with the bank in the next six months â as do 36% of corporate clients of the State Bank of India and 27% of the clients of HFDC. Japanese banks such as Bank of Tokyo Mitsubishi UFJ and Mizuho Corporate Bank also are likely beneficiaries of the shift in bank relationships.
lj
