Cash & Liquidity Management

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European Corporate Banking: As Crisis Subsides, New Questions Arise Europe’s largest companies are reporting fewer problems securing funding for their operations and increasing demand for credit to fund growth-oriented capital expenditures. Positive developments such as this suggest that big European companies are at last emerging from a period of global recession and financial market duress. However, as these companies transition from survival mode to a more ‘normal’ posture focused on growth, Greenwich Associates consultants point out that they should be aware that, when it comes to their relationships with bank and process of financing their businesses, the new normal might be much different than the old.

Greenwich Leaders: European Corporate Banking

Relationships between large European companies and their banks generally survived the historic turmoil in the economy and the banking industry and the rankings of Europe’s top five corporate banks remained unchanged throughout the crisis.

That is not to say that corporate banking relationships were unaffected. On the contrary, companies perceptions’ of their banks were profoundly influenced by banks’ credit policies: Banks that were seen by their clients as stepping up and providing support during the crisis have seen their brands and reputations bolstered among corporate clients; banks seen as less supportive have seen their client quality ratings tumble.

However, Greenwich Associates research shows that quality scores for banks that tightened credit policies did not fall in unison. Rather, ratings for some banks fell precipitously while other banks experienced only moderate declines.

“Our research shows that the wildcard is the Relationship Manager,” says Greenwich Associates consultant Tobias Miarka. “Companies that give high quality ratings to the individual Relationship Manager that covers them from a given bank penalized that bank less severely for a perceived failure to support them with credit during the crisis.”

Every year, Greenwich Associates interviews senior financial executives at the largest European companies about their banking relationships. These executives are asked to name the banks they use in overall corporate banking, cash management and capital markets advisory services, to quantify the share of their business allocated to each bank and to rate these banks according to a series of important criteria. Banks that receive the largest number of citations/market share are named Greenwich Share Leaders. Banks receiving quality ratings that exceed those awarded to competitors by a statistically significant margin are named Greenwich Quality Leaders. 

Greenwich Share Leaders, 2010

Note: Based on 221 respondents for European Large Corporate Banking, 234 for European Cash Management and 186 for European Debt Capital Markets, Share Leaders are based on top 5 banks including ties. Source: 2010 European Large Corporate Banking Study (FT 500)

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