The AT30 meeting had its third meeting on September 18 – 19 which was hosted by Google and sponsored by Citi. There was an excellent agenda covering a wide variety of topics but the one that resonated most across the membership was on the matter of bank relationships, specifically using scorecards and share of wallet analysis’ to effectively manage those relationships. The discussion was broken into three parts beginning with samples of member scorecards and input from Citi on their views of being on the receiving end of these tools. The second part of the discussion focused on bank consolidation strategies and how these management tools play a role in those sometimes difficult decisions. The final segment was closed to the sponsor anticipating that members might have some additional thoughts to share were the sponsor bank not in the room.
- Share of wallet trumps the report card. Members are far more likely to track the allocation of business with their banks than maintaining a report card on their performance. The report card tends to be more qualitative and anecdotal in nature, relying on input from many sources, while the share of wallet analysis is more data oriented and useful in revealing which banks have what business and determining how to reallocate that business when necessary.
- Sharing the data with the banks. Members are divided on whether or not to share their information with their banks. Those who do expect that this action will help develop, deepen and improve those key relationships. Sharing the data communicates that the bank is important enough for the client to go to this trouble, but also communicates that the client is watching and is serious about having strong healthy relationships. Those banks who value the strategic relationship take it seriously and value the feedback. “We love to receive this feedback” stated Mike Fossaceca with Citi.
- Ask the bank what they want. Banks have a variety of product offerings, which vary by profitability, level of competence and relevance to the client. Members and bankers agree that there should be a discussion about the business banks want most from a client. Elyse Weiner, managing director at Citi, noted, for example, that clients often assume that lockbox services is a desirable piece of business, when in fact, for a lot of banks, it is not.
- New questions about the role of credit. It is no surprise to here a treasury practitioner say, “we award business only to banks in our credit group” or that “it is a challenge keep all of our banks happy with business.” It is for that reason that one member challenged Citi, whose practices are industry standard, on why banks always use credit as a loss leader and then clamor for the real revenue generating business. Why not simply price the credit accordingly and therefore not be so dependent on the other sources of business. This could end up in higher costs for corporates but less headaches with managing relationships.
The other big, and multi-part, discussion came on day 2 and focused on managing liquidity in highly regulated markets, specifically Argentina, Brazil and China. Citi began the session by giving a laundry list of approaches for getting money out of such countries including the use of a “netting center”, “procurement center”, a re-invoicing center” and creating “special vehicles” such as an offshore fund. The remaining discussions were led by a member who shared their experiences in all three countries.
Other topics covered included a roundtable discussion on adding value to the business units and a presentation from Oracle on their investment portfolio evolution from very conservative to a somewhat more liberal approach to investing, a shift that is driven by a fire hose of cash buildup.