How can FDs get the banks batting for their side?

“Banks need money by way of raising deposits. More importantly, they need capital.” So said John Grout, technical director at the Association of Corporate Treasurers (ACT).

There’s no denying that banks are not bending over backwards to offer borrowing at present, and it’s true that polite requests for credit are increasingly being met with polite refusals. So how can FDs take a proactive approach and improve their standing with their main relationship banks?

Simply complaining that banks won’t listen will no longer cut it, so it’s up to FDs to re-appraise how they deal with banks:

Banking clients need to demonstrate a commitment to their main relationship bank. Put simply, banks are far more likely to put more investment into their relationship with the clients that buy ancillary services. In the good times of easy credit, spreading deposits and banking providers around may well appear a good idea. But when credit markets tighten, treasurers and those charged with cash management need to pick a smaller number of banking service providers and stick to that.

So, if you’re keen to improve your standing with the bank, consider the amount of extra business you can put your bank’s way and offer it the opportunity to bid for the work. There is a list of services FDs can potentially contract out to your bank. This means pooling the services then buy into one or two key banks. These include:

Insurance
Foreign exchange
Factoring
Corporate finance services
Treasury

If you’re spending an extra £75,000 with your deposit bank on, say, foreign exchange services, then your banking relationship manager is far more likely to look favourably on your application for an overdraft extension.

For the clever FD, the trick is to identify what business services the bank can efficiently provide and switch over. For the rest, stick with the experts.