Corporate Treasurers Scrutinizing Bank Health, AFP Survey Shows

Treasurers value strategic bank support more than cost, credit also a factor

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Association for Financial Professionals

Nov 07, 2011, 08:00 ET

BOSTON, Nov. 7, 2011 /PRNewswire/ -- In reaction to the financial crisis and recession, treasurers are increasing their due diligence on potential banking partners and delving deeper into the health of existing ones. In fact, a bank's perceived health can make or break its ability to win corporate business or preserve corporate clients, according to a survey by the Association for Financial Professionals (AFP).

The 2011 AFP Treasury Benchmarking Survey, underwritten by PNC, found that over 70 percent of corporate treasurers consider a bank's health to be a significant factor in initiating or maintaining a business relationship, and 19 percent changed banks last year due to concerns about a bank's health. Yet, companies put great value on the stability of their bank group—6 out of 7 say that maintaining a stable bank group is important. Of those surveyed, the average company maintains about five banking relationships, which endure about 10 years.

"The instability of the financial system has caused companies to take a closer look at their banks and solidify relationships with the ones that can help them accomplish their business goals," said Jim Kaitz, AFP's president and CEO. "They are monitoring banks on their own, beyond information provided by rating agencies."

Other factors that treasurers consider when considering banking partners include strategic support, superior products and services, historical relationship, ability to provide access to credit, and the bank's global footprint. Despite economic pressures, only half of survey respondents indicate that cost is an important consideration for establishing a bank relationship.

Some technologies have greatly enhanced banking relationships, treasurers say. Nearly three out of five survey respondents indicate that electronic bank account management (eBAM) for bank account maintenance has been an important development. Another Forty-three percent believe cross-bank zero balance accounts (ZBA) have also been important.

The 42-question survey generated responses from 720 organizations, evaluating operational issues for treasury departments that directly impact an organization's success. In its three-year lifespan, this is the first time the survey has emphasized bank relationship management.

Corporate treasury departments use the survey as a basis for comparison with the best of their peers. It identifies performance levels of participants, analyzes performance by peer group, and defines world-class (80th percentile) targets across key operational areas ranging from processes to personnel to technology.

View more survey results on www.afponline.org/benchmark.

About AFP®
The Association for Financial Professionals (AFP), headquartered outside Washington, D.C., serves a network of more than 16,000 members with news, economic research and data, treasury certification programs, networking events, financial analytical tools, training, and public policy representation to legislators and regulators. AFP is the daily resource for the finance profession.
AFP's global reach extends to over 150,000 treasury and financial professionals worldwide, including AFP of Canada; London-based gtnews, an on-line resource for the treasury and finance community; and bobsguide, a financial IT solutions network.

SOURCE Association for Financial Professionals