Regional Bank Relationships in Asia

Report date: 
2 Jun 2022

Commentary

 

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The way treasurers manage banking relations provides a key insight into how they approach their job. This session was no exception – and we had the additional benefit of input from senior banker in Asia and Advisory Board member John Laurens, who shared his view from the other side of the fence.

  • Nearly everyone had the same goal: try to get the most efficient banking structure.
  • This nearly always involves a general preference for dealing with core international relationship banks over having many local relationships
  • However, one participant commented that local banks in Asia often have excellent technology and services – but it is difficult to get HQ to agree to go with them
  • In any case, there are many situations where local banks are still required, to support tax payments or local payment systems. China, India, Korea and Japan were the countries where this was most frequent.
  • In awarding business to banks, most companies tend to give a preference to the institutions who participate in credit facilities. Exceptions were made when justified by a specific service, but this could become an issue when credit needs increased.
  • Several participants have either recently restructured their banking relationships, or are currently doing so. Comments:
    • It is very important to get the local team on board. They will usually accept the outcome and help if they own the decision, and can see clear benefits.
    • The RFP process is useful, but it is important to carefully check the responses. One participant found that banks often tried to sell capabilities they did not yet have – it is important to focus on what they can deliver today. They also found it was beneficial to use your peer network to find out what banks actually deliver, versus their promises.
    • Everyone put a high store on flexibility – banks who insist on forcing you to do things their way are not appreciated.
    • Equally important is service: the US banks, in particular, are trying to push their clients towards self service solutions, are not liked. The traditional RM is highly valued, especially if they are good.
    • Although travel restrictions are easing, discussions and negotiations are still happening remotely via Zoom, which is not ideal.
  • Asian banks typically score highly on their technology, but there are still issues with the availability of MT940s, especially in certain countries.
  • But even when MT940s are not available, participants still found it possible to run treasury operations from a central location, though local language capabilities are useful.
  • In terms of international banks, JPMorgan and HSBC received the most positive comments, though neither was ideal. Citi were generally criticised for excessive rigidity and not having virtual accounts available, despite having promised them for years. Several regional and local banks received positive mentions, including DBS and ICBC, who are making moves to provide relationship management, along the lines practised by international banks.

Bottom line: these are familiar concerns, but they reflect the daily challenges which are important to treasurers. The comment from John Laurens was interesting: as a banker, he felt a lot of pressure from corporates to accept and implement their APIs, and to provide cloud based services, to remain relevant. This was not mentioned at all in our discussion. 

Does this mean the pace of change is not as fast as we might have thought?

Contributors: 

This report was produced by Monie Lindsey, based on a Treasury Peer call chaired by Damian Glendinning with additional commentary from John Laurens

Topics covered in this report: 
ASEAN, Bank Relationships, RFPs
Service providers discussed in this report: 
Citi, JP Morgan, HSBC, Deutsche Bank, BAML, Standard Chartered, ICBC, DBS, Bank of China

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