Over the past four years, the increasingly desperate scramble for credit has cost corporate treasury staffs a lot of independence when it comes to dealings with their bankers. The price for scarce credit has not been high interest rates, but rather business packages that channeled cash management, custody, pension and investment banking services to the most generous lender rather than the best service provider. The practice has been pervasive enough to capture the attention of the Federal Reserve, which earlier this year put out guidelines on what qualifies as bank tying–that is, the illegal act of predicating offers of credit upon the award of other fee-based business–and even fined one particularly egregious transgressor.

Now, after nearly a decade of negotiating with banks from a steadily deteriorating position, the most alert corporate CFOs and treasurers have noticed that power is shifting, and naturally they are seeking ways to take advantage of what they perceive as newfound leverage. "The pendulum is starting to swing in favor of corporate treasuries. Banks are still in control of relationships, but that is about to change," says Anthony J. Carfang, a founding partner of Chicago-based Treasury Strategies Inc.

Why? First, to please the investment community rather than to cut ties to banks, treasurers are learning to live with less credit and more liquidity. That strategy is translating into a healthier balance sheet and ultimately a stronger bargaining position when it comes to their bankers. But second, and probably more important, credit is just more available and priced at levels that both lender and borrower can live with. "We're seeing a real upturn in the supply of credit. Banks would love to lend to corporations now," notes Meredith Coffey, senior vice president and director of analytics at New York-based Loan Pricing Corp. In the investment grade market, syndicated credits now are frequently oversubscribed after years in which they were hard to fill, Coffey reports. Upfront fees are coming down, sometimes to zero, and tenures are getting longer, sometimes out to five years, she adds.

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