One bank's pain is another bank's gain...

Discussion in 'Wall St. News' started by ASusilovic, Mar 8, 2009.

  1. Every time another bank founders, it’s worth remembering that at least one of its rivals is probably going to benefit, as corporate clients look to ditch the weak(er) for the strong(er). Greenwich Associates reminds us about those profiting from adversity, in its latest survey of companies around the world and their view of banking services on offer.

    Greenwich asked 638 companies to name the banks with which they do business with or know well and to assess their banks’ handling of market turmoil over the past six months. 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.

    Funnily enough, it turns out that many companies 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 - among them, PNC Bank, US Bancorp, JP Morgan and Deutsche Bank in the US; Nordea and BNP Paribas in Europe; and State Bank of India and HDFC in Asia.

    The survey found that banks that have benefited most from government guarantees and capital injections will see the most meaningful reductions in business. 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”, said Greenwich consultant John Colon.

    Over the near term, several banks that are in a 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,” according to Greenwich.

    In fact, the shift in corporate banking business from global to local providers appears to be gathering steam as the world’s biggest financial firms face new political pressures that make international lending more difficult, the report noted. Right now, there is little incentive for the big UK and US banks to extend credit to companies outside of their home markets and it is becoming increasingly hard to operate as an international bank, it noted.

    Here are some of the key findings:


    At the top of the very short list of banks that have burnished their reputations among corporate clients in the US as a result of their handling of the financial crisis are US Bancorp and PNC Bank — 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 US are JP 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 US companies.


    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 “wallet” 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.


    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 India’s HDFC. Chinese banks’ reputation appears mostly unaffected by the crisis. Among the region’s 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 — as do 36% of corporate clients of the State Bank of India and 27% of the clients of HDFC. Japanese banks such as Bank of Tokyo Mitsubishi UFJ and Mizuho Corporate Bank also are likely beneficiaries of the shift in bank relationships.
  2. WesSeid


    Of course, and that's how it's supposed to work in America. I was talking to a banker/trader yesterday who said smaller banks like his are doing great across the country, and that the big bailouts are impeding the smaller, good banks from increasing their business.

    He also said if you have decent credit and a job, you should be able to get a loan no problem. He basically said the same thing most should already know, that the "credit crunch" and "bad banks" are only linked to the banks "too big to fail" that helped themselves to the CDS crap.
  3. clacy


    The key word there is SUPPOSED. Unfortunately, the US Government can be bought and paid for. The lion's share of the econonomic decisions are now made by a small, incestuous group of people that have all worked for GS in the past 5 years.

    Obama talks change, but his actions say "politics as usual"
  4. Thanks for the article.

    The author forgot Rabobank however.

    They are doing just fine and still the only tripple A bank in the world?