Driving Better Bank Relationships

Rome sessions focus on how treasurers can clearly communicate their needs and foster collaboration.

Treasurers took the lead in asserting how banks can better meet corporations’ needs, while banks signaled their willingness to work to improve the relationships in several sessions at last week’s International Cash and Treasury Management conference held by EuroFinance in Rome.

During a panel discussion focusing on the relationship between banks and corporates, treasurers expressed their frustrations with perceived gaps in communication, with Mark Kirkland, vice president of treasury at Bombardier Transportation in Switzerland, observing that banks don’t always fully understand their corporate clients’ business. A poll of the audience suggested that 55% of delegates thought corporates could best improve the relationship with their banks by providing greater openness and transparency. But what is it that banks need to understand better? And what can treasurers do to facilitate this?

Some specific obstacles in the bank-corporate relationship were identified during the debate. Kirkland highlighted the importance of gaining a better understanding of bank charges, saying that transparency is an improvement point. Another poll revealed that the audience regarded the biggest shortcoming of the banks to be documentation—a topic that Daniel Schmand, managing director and head of trade finance and cash management for corporates EMEA, at Deutsche Bank, described as the “elephant in the room.” Schmand suggested that the industry needs to take a broader approach to simplify processes—and that banks should try to view these issues from the perspective of their clients.

Beyond these issues, some interesting points were raised on the wider topic of communication. More than once during the discussion, the bank-corporate relationship was likened to a marriage, with a similar need for trust and openness. According to Kirkland, this doesn’t mean that the treasurer needs to explain the company’s annual report to the bank. Bombardier has developed a scorecard that it shares with its banks to provide clarity on how the company values and measures the relationship, he said. This approach also allows conversation with a bank to focus on information spanning several months, rather than the issues of the most recent weeks. While the latter may be uppermost in the treasurer’s mind, they are not necessarily representative of the relationship as a whole.

One innovative approach to the issue of communicating more effectively with banks was described in a presentation by Tracey Brazier, the U.K.-based cash and treasury services manager for food, agricultural, financial and industrial company Cargill. As part of a wider internal initiative known as Tartan, Brazier was involved in developing a ground-breaking partnership agreement, the Tartan Enabling Mandate, setting out a code of conduct for the company’s relationship banks. While the document was not legally binding—a point which the banks were keen to ascertain—it has led to greater clarity for all parties regarding the company’s expectations. Brazier noted that the banks have found it useful as a means of explaining internally how they work with Cargill.

While communication with banks is one essential part of the treasurer’s job, communicating with other treasurers is increasingly being recognized as another. The Cargill project would not have been successful if it weren’t for the company’s discussions with other corporates and benchmarking against its peer group, said Jeremy Kidd, the company’s global treasury IT manager and bank strategy project technical lead. And banks are increasingly willing to collaborate too, according to Kidd, who described the phenomenon as “co-opetition.”

His observation was borne out by an audience poll earlier in the conference, in which 71% of banks said they would collaborate with other banks to get uniform standards. As part of the Tartan project, a number of banks took part in joint meetings organized by Cargill, ultimately enabling the company to drive the consistent use of data standards across multiple relationships. As Kidd says, treasurers should not underestimate the extent to which their banks are prepared to work together.



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