From the October 2011 issue of Treasury & Risk magazine

A Gain In Pricing Power

Banks' prices for treasury management services rise in 2011, while discounting declines.

Banks’ prices for treasury management services moved higher in 2011, according to the annual Blue Book survey from Phoenix-Hecht. The average list price rose 1.8%, putting it a little above last year’s 1.5% rise in consumer prices, and discounting declined a bit, to 44%, down from 45% last year.

“The banks seem to be in a little bit better position to get prices that they would like to see,” says David Bochnovic, executive vice president at Phoenix-Hecht.

For the first time, Phoenix-Hecht collected data on the earnings credit rate (ECR) banks apply to corporate customers’ balances in non-interest-bearing accounts and found rates ranging from 0.01% to just over 1%, with the biggest chunk of ECRs falling between 0.20% and 0.35%. “There are a lot of ECRs out there, even from the same banks,” Bochnovic says.

The survey also suggests credit providers are wielding a little more influence over companies’ purchases of cash management services, at least at smaller businesses. Almost 62% of companies with revenue of less than $500 million say they would expect to move cash management business to a new bank that gave them a credit package, up from 54.3% in 2010 and 53% in 2009. Among larger companies, just 34.3% would expect to move cash management business, up from 31.9% in 2010 but down from 43.6% in 2009.

You can see a summary of the Blue Book here.


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