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Taking Advantage Of Extra Clout At The Bargaining Table

Although consolidation ensures banks long-term negotiating strength, CFOs and treasurers are enjoying a taste of power thanks to kinder credit markets

By Richard Gamble | Updated on January 01, 2004

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.

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