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Many European corporate treasurers reportedly still giving certain banks a wide berth.
Comical, tragic, a whitewash, a fiasco. These were just a few of the words and phrases used to describe the European stress tests after the results were released in late July. Of the 90 some-odd European lenders tested, only seven failed. And even though European monetary officials recently have suggested more testing may be on the horizon in order to restore investor and counterparty confidence, it might be too late.
September 03, 2010 -
US banks don’t fare well in world’s safest bank survey. Low ranking another argument for shoring up ISDA program.
The world rankings of the safest banks are out and few US banks made the top 50. This is by no means a huge surprise but given the emphasis on ISDAs in wake of the financial crisis, it’s good to know where a bank stands and, perhaps, how much more starch a collateral support agreement (CSA) should have.
August 30, 2010 -
By Joseph Neu
Eliminating systems-change headaches as a roadblock for new business.
With bank counterparty concerns re-emerging, efforts by banks to ease customer switch-overs in the last 18 months may pay off in new customers. As many treasury managers know, a major roadblock to switching banks is the prospect of migrating to their systems. “It’s enough of a headache, that you want to stay with the bank you have,” one treasury manager noted at a recent NeuGroup peer meeting.
July 07, 2010 -
In financial reform aftermath, one thing's certain: more paperwork and higher hedging costs are coming.
What’s in the new finance rules for you? More costs and more documentation.
No, the news is likely not good for corporate hedgers: costs are going up and corporates with ISDAs governing derivatives across multiple asset classes (e.g., FX and commodities) might find themselves forced to renegotiate ISDAs with some or all their counterparties while also facing increased risk.
June 25, 2010 -
Eliminating systems-change headaches as a roadblock for new business.
With certain bank counterparty concerns reemerging, efforts by banks to ease customer switch-over the last 18 months may pay off in new customers. As many treasury managers know, a major roadblock to switching banks is the prospect of migrating to their systems. “It’s enough of a headache, that you want to stay with the bank you have,” one treasury manager noted at a recent NeuGroup peer meeting.
June 23, 2010 -
A roundup of topics International Treasurer is investigating.
Three topics that International Treasurer will be following stem from The NeuGroup’s Latin American Treasury Managers’ Peer Group meeting this week. The fourth, concerning OTC derivatives, is indicative of the growing consensus that the financial reform legislation addressing them is nearing the finish line.
June 17, 2010 -
International Treasurer investigates an increasingly pressing topic.
The financial crisis made clear that treasury better have a good handle on cash. With capital markets virtually frozen and beleaguered banks in cash-conservation mode, the last place any treasurer wanted to be was in front of the board telling it he didn’t know the company’s cash position or whether or not there was enough to service debt or even pay for an acquisition. Therefore, to get a handle on cash, treasurers have focused on rationalizing their company’s bank accounts.
May 13, 2010 -
By Dwight Cass
But it’s now a two-way street: Banks are formalizing their tougher lines on relationship management.
The credit crisis taught treasurers some painful lessons in bank relationship management. Many are now taking those lessons to heart as they reshape their bank groups to shrink the ranks of their liquidity providers and to ask the ones that remain for bigger commitments. As credit becomes more available, corporates are once again on reasonably equal footing with their lenders, who can no longer demand outrageous share of wallet based on their "franchise values."
April 12, 2010 -
By Joseph Neu
Over the past 18 months, treasurers have no doubt heard countless statements from banks regarding how client-focused they are, have been, always were—unlike “some other banks” that favored trading for their own account—and therefore customers should allocate more post-crisis share of wallet their way to reward their client-centric way of doing business. The some-other-bank that is most often understood to be the target of these comments is Goldman Sachs. Little wonder then, that Goldman feels like it has had to respond to such competitor commentary, as it has done most publicly in the letter to shareholders accompanying its annual report released early this month.
April 12, 2010 -
Banks formalize their tough lines on relationship maintenance issues.
A presenter at The NeuGroup's Treasurers' Group of Thirty discussed how his bank has added another cull to the client relationship process. Now, along with getting a transaction through the credit committee, a relationship manager has to run it up the flagpole for the “Deal Prioritization Committee”—and that turns out to be the bigger challenge.
March 16, 2010 -
The devil will be in the details but some broad projections can be made.
The White House's "Volcker Rule" is pretty vague at this point. But bankers and analysts are already making a few broad projections about how it will affect companies. Some of these are alarmist attempts to strangle the measure in its crib. But assuming it does become law, it's true that the Volcker Rule will have a profound effect on the financial markets.
January 22, 2010 -
A roundup of issues International Treasurer is investigating.
It’s too early to tell whether President Obama’s new plans to tax non-deposit liabilities and curb principal investments by banks will have a deleterious effect on corporate access to credit. After all, the main issue right now is the lack of demand for such credit. If appetite returns to the extent that liability and leverage limits actually constrain individual banks’ ability to satisfy it, no doubt other institutions that don’t fall under the new regulations will step in to provide credit—not unlike the development and flourishing of the term B loan market over the past two decades.
January 21, 2010 -
By Dwight Cass and Ted Howard
The aughts left few treasury functions untouched.
What a difference ten years can make. Despite the Y2K scare, the eve of the new millennium was freighted with hopeful expectations—the dotcom bubble had yet to pop and the internet appeared poised to transform many aspects of treasurers’ jobs. But in retrospect, the decade that followed rewrote the world of treasury more dramatically than anyone could have anticipated in 2000. Here’s a look at some of the big issues covered by International Treasurer, then and now.
January 12, 2010 -
By Dwight Cass and Ted Howard
The crisis has receded but much hard work remains.
With signs multiplying that the worst of the financial crisis is over, treasurers are hoping for a quiet year in which to regroup. They are unlikely to get it. The meltdown exposed deep-seated problems and challenged long-held assumptions. Treasury departments, for the most part, rose to the occasion during the maelstrom and kept their companies financially afloat. But like survivors of a natural catastrophe, they now face the big job of taking stock and rebuilding.
January 12, 2010 -
TBTF lenders pull in their horns as treasurers rationalize bank groups.
Treasurers seeking to rationalize their bank groups have found some of their legacy lenders reluctant to bid for ongoing business. These tend to be the too-big-to-fail banks that the government has bailed out and supported through its TARP, TLGP and other programs. One treasury consultant notes that firms that are currently rationalizing their banking relationships in the wake of the financial crisis typically do not want to restructure their groups again for a number of years, so banks that stick to the sidelines now will be unable to bid for that business for some time.
January 05, 2010 -
The latest topics International Treasurer is investigating.
As this turbulent decade limps to an end, there remain plenty of unknown unknowns that require continued vigilance. In particular, treasurers are taking pains to secure their liquidity needs. Some are prefunding in the rallying capital markets, thereby lowering their exposure to the banking sector. That seems wise, since it is still deleveraging, reliant on net interest margin (and some prop trading) facilitated by the government-contrived yield curve arbitrage, and lumbered with difficult-to-quantify exposure to deteriorating sovereign debt and other assets.
December 30, 2009 -
By Dwight Cass
The crisis thinned the herd, but survivors aren’t as irreplaceable as they think.
The financial crisis thinned the banking world’s herd. But its survivors are not as irreplaceable as they might like to think. Big underwriters have been shepherding trillions of dollars of debt to market this year, collecting significant fees while having to put little risk-adjusted capital on the line. But some treasurers and investors argue that these firms are more or less interchangeable. The story with bank lending is more complex—a number of factors still constrain the availability of credit. But treasurers with pending loan renewals or those looking for new money are not wholly without their options, either.
December 07, 2009 -
Bankers are slowly turning corporate credit taps back on. But they’re demanding a sizable pound of flesh in return for access to loans. Members of The NeuGroup’s Treasurers’ Group of Thirty Peer Group discussed some of their experiences seeking acquisition financing and simple liquidity backstops at a meeting hosted by BNP Paribas in New York last month. Unlike the 2005-2007 credit boom years, the shadow banking system of securitizations, collateralized debt obligations and other loan-vacuuming technologies has all but collapsed. Banks therefore are putting their own capital to work, and since they’ve got more skin in the game they’re demanding the upper hand.
November 03, 2009 -
By Joseph Neu
For some markets, the situation a year after the collapse of Lehman Brothers is roughly the same as it was prior to it. A week before the collapse, for example USD/EUR was 1.427 and 12 months later it was around 1.429. The financial press, similarly, is talking up the return of business as usual in financial markets. However, this does not mean the one-year anniversary of an event that ushered in the worst of the financial crisis has not had an impact—far from it.
September 16, 2009 -
By Joseph Neu
As noted in June, corporate treasurers are starting to scrutinize more closely the quality of their investment banking services as the price of credit rises. It appears that they are not alone in their scrutiny of the value for money in investment banking.
August 19, 2009