Strategic Treasury

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The Treasurer’s Voice: Bank Relationships This article is the first in a new series in TMI, ‘The Treasurer’s Voice’ in collaboration with Treasury Strategies Inc. Each month we will publish a short survey (which you can find on our website) to which we invite all treasury professionals to respond. The results are then analysed by our Editor, including comment from industry experts.

The Treasurer’s Voice: Bank Relationships

The Treasurer's Voice: Bank Relationships

by Helen Sanders, Editor

This article is the first in a new series in TMI, ‘The Treasurer’s Voice’ in collaboration with Treasury Strategies Inc. These articles aim not only to share the views of banks, vendors and industry experts on key treasury-related topics, but also to canvass the views of our readers across the world. Each month, we will publish a short survey (which you can find on our website, www.treasury-management.com or in our weekly emails) to which we invite all treasury professionals to respond. In the following edition, we will then analyse the results with industry experts. Please click here to access the latest survey.

The first survey, conducted during November 2011, attracted over 100 responses on the topic of bank relationship management. The survey aimed to ascertain treasurers’ plans for tendering their cash management business over the coming year, the regions of focus, and their criteria for selecting or retaining a cash management bank. Our industry spokespeople this month are Michael Spiegel, Head of Cash & Trade, Deutsche Bank, and Aidene Walsh, Head of Global Transaction Services, UK & Ireland, The Royal Bank of Scotland.

2012 tender plans

The first question aimed to understand treasurers’ plans for tendering their cash management business over the next 12 months (figure 1). Of these, over half (52.4%) had no plans to tender their cash management banking business, which were more or less evenly divided between those that had recently reviewed their cash management banks (27.2%), and those that were satisfied with their existing arrangements (25.2%). However, the remaining 47.6% intended to review their cash management banks in the coming year, the majority of which intended to do so either for their global business or for one or more regions.

The fact that a company intends to review its cash management banking globally does not imply, however, that it will appoint a single bank across all regions. As Michael Spiegel, Deutsche Bank explains,

“Our experience over the past 12-18 months is that few companies tender their cash management business with the expectation that they will make a single appointment, except for the smallest companies. In the current environment, it is no surprise that treasurers prefer to balance their risk and relationships. Consequently, the approach tends to be regional: for example, we have seen a number of tenders recently for Europe, Middle East/North Africa, and Latin America. In some cases, it also makes sense to tender cash management banking in individual countries where the volume or complexity is particularly high, in order to leverage best-in-class local services and further diversify risk.”

Aidene Walsh, RBS concurs,

“With the exception of small and medium-sized enterprises (SMEs), most international corporations are inclined to appoint regional banking partners, often with the addition of a global overlay structure. A major factor that influences companies’ choice of regional banks is the overall credit relationship, as treasurers will seek to establish reciprocal relationships with their credit banks and award them mandates for ancillary business such as cash management.”

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