BANKING SERVICES MARKET WILL FAVOR BUYERS IN 2004

Global Finance, 2004 by Platt, Gordon

Senior executives from among the winners of Global Finance's Best and Safest Banks awards offer their advice to finance directors on selecting the ideal banking partner.

Top bank executives around the globe say the market for corporate banking services will be extremely competitive in 2004. Some banks are offering discounts to their best corporate customers, and many are upgrading their technology and introducing new products to satisfy increasingly demanding clients.

In such an environment, it pays for finance directors to shop around for the services they need to survive and prosper. Leading bankers among the financial institutions named by Global Finance as Best Banks in 2003 advise finance directors to consider a wide range of factors in selecting a banking partner. These include capital, stability, liquidity, efficiency, credit ratings and price of services. But in the end, the bank executives say, the most important reason for selecting a financial institution often is a gut feeling that the fit is right.

"Proven expertise in a particular product, sector or geographic region is a clear advantage to a particular institution," says Jacko Maree, CEO of Standard Bank of South Africa. "The ability of a bank to support its advisory role with its own balance sheet can also add value," Maree says. "However, the success of any transaction is often as a consequence of chemistry between adviser and client."

In the specialized area of trade finance, where time is of the essence, customers' demands continue to increase, says Christian Gut, managing director and head of trade finance at Zurich-based Credit Suisse. "Customer requests have to be dealt with almost immediately, thus allowing our customers to conclude a transaction instantly," Gut says.

Credit Suisse relies on specialized managers to support its customers in their business, particularly in emerging markets where Credit Suisse has representative offices, Gut says. "What others refer to as relationship management, for us means to act in partnership with our customers," he says.

When selecting a bank, a CFO must consider more than just the major financial indicators of the financial institution, says Michael Nadel, chairman of Kyrgyzstan-based AsiaUniversal Bank. "Numbers never tell the whole story," Nadel says. "It is important for a company to consider the operational fit with the bank, as well as the relationship that is established between the financial officer and the banker."

Today's corporate financial executives require much more than standard banking services, according to Nadel. "They expect the bank to act as an adviser, as a partner, and most importantly as a catalyst for the continued growth of the client's business," he says. "From our experience, customers often turn to their bankers for the type of expertise or unique knowledge that simply might not be available elsewhere."

Finance directors should look for a stable and reliable bank with a full range of services, says Sandor Csanyi, chairman and CEO of Budapest-based OTP Bank. The bank's professional staff should have excellent knowledge of both the domestic and the international economic environment, he says.

"Such a universal bank not only will be able to support the company at the different stages of its development, but also should be able to act as a mediator between governmental institutions and the corporates," Csanyi says.

It pays for a finance director to select a strong banking partner for the long run and not just for a particular deal, says Oleg E. Tumanov, deputy CEO of Moscow-based Alfa Bank. "This makes life easier for the client, from cheaper service to faster credit decisions and bigger credit facilities," Tumanov says. While speed of service, quality and costs are becoming more and more important, it is hard to be a leader in all three areas, he says.

Noting that many companies got burned in the Russian financial crisis of 1998, Tumanov says Alfa Bank has created a special department focusing on debt restructuring. "While this department consults with companies on available options, it can also help creditors in finding ways to offset their claims against a defaulting party," he says.

Large corporate customers with a high credit rating still need to work with a bank for short-term placements and borrowings, Tumanov says. "They also need creative bankers to work with them on finding non-standard solutions, for instance for their network of daughter companies and subsidiaries," he adds.

Smaller corporate customers need cost-effective, standardized products of good quality, which Alfa Bank can provide immediately off the shelf, Tumanov says.

In South Korea, Shinhan Bank provides free education to finance directors in such areas as taxation, international trade, foreign exchange and financial derivatives. The bank also holds seminars and accounting courses on specific foreign countries. The courses recently have focused on China and Vietnam.

"Finance directors should choose a bank that offers a full range of product lines through a single portal," says SangHoon Shin, president and CEO of Shinhan Bank. "The corporate finance executives also should be advised to select a bank that has low fund-raising costs in light of its high international credit status," he says.