Love your bank to get the most out of them

David Lock examines why business customers of the banks need to nurture a long-lasting relationship with their lenders.

As an ex-banker, I’m pretty used to not feeling loved at various times.  

To be fair, a lot of my customers ‘got it’ - the bank was important to unlocking the future potential of their business and they treated me accordingly, but others were always going to have the bank = commodity mindset.

So, given interest rates appear to be capping out, none of the banks have gone ‘pop’ recently and there is nothing on the immediate banking horizon to get excited about, we thought we would turn our attention to something that very few businesses get 100% right – how to treat your bank to maximise your relationship with them.

“Why bother in the first place?" I hear you cry, “I have a great business and the bank will always be there to ‘jump’ when I ask them to.”  Well actually, no.

Banks are becoming increasingly sophisticated, considerably more aware of where they are making money and are much more likely to take into account the overall strength of a relationship when making credit decisions.  

In short, they are fed up with being taken for granted.  Treat them badly or make their life difficult and we are increasingly seeing them moving onto more respectful customers.

Keeping your bank on board

So, what are the key secrets to keeping the bank on board?

Well, here are a few key themes and pointers, based on years of experience:

• The Jigsaw Puzzle:  Too many times businesses approach a bank for funding with an overload of random, disconnected bits of information, models and scraps of reports and expect the banker to piece it all together – ‘let them do the work’.  Unfortunately, bankers are busy people and are not minded to do your job for you.  If you want a few million pounds, then you need to approach them in a sophisticated way that plays to their own processes and requirements. If you do not understand what that is, then get an advisor on board that does.


• The Equity Approach:  As a banker I was often presented with a deluge of ‘exciting jam tomorrow’ information which focussed on growth and the expected increase in shareholder value – but the bank was not a shareholder. Remember:  a banker’s primary mindset is fixated on whether or not they are going to be safely repaid.  Explain to them why your business is ‘not likely to fall off a cliff’ rather than rub their nose in the fact that you are going to make £millions by using their balance sheet.


• I can’t name my Relationship Director: Yes, it can be a little frustrating in this day and age to have your Relationship Director changed every 5 minutes.  Alas, gone are the days of having your local branch manager for life…but that’s no excuse to give up on a relationship building exercise.  Get to really know your banking Relationship Director and anyone from the Structured Finance division that is/was involved in lending to you. Wine them, dine them, make them feel special - they are your biggest ally if you want more or if anything goes wrong. If they don’t contact you, contact them.


• Only on a ‘Need to Know Basis’:  Most importantly, give your new friendly banker an early heads up if something might trigger a problem.  Credit Committees and ‘work-out’ teams will take a more draconian view if they think they have been kept in the dark until it is too late. Breaching a covenant is not the end of the world - they are designed to ‘bite’ as an early heads-up in order to promote discussion and find solutions, months in advance of any real issues – not to ‘pull the rug’. The bank has nothing to gain from over-reacting and will be keen to avoid reputational issues of calling in debt or suffering a write-off.  They may even change the covenant if it has clearly been set at the wrong level.  


• I really screwed the Bank down on pricing: You need a strong, reliable financial partner to support your growth programme, so give a little back and keep the bank on board, based on mutual respect for each other’s business model.  The very best management teams we work with seem to inherently get this – valuing strength of relationship, flexibility and deliverability over pure pricing.


• Ancillary Wallet: Banks often grumblingly suffer the provision of debt to obtain the incomes that they really want, which are the ones that don’t use their balance sheet capital up – e.g. day-to-day banking, fee income, hedging, FX, deposits – this is all called ‘ancillary wallet’ and bear it in mind as it’s the biggest carrot you have.  Again, all too often we see businesses trying to make a banking case based purely on the funding that they require without any consideration of the wider banking piece.

I suspect that many of you are nodding your head at each point and dismissing it as common sense.  It’s hard to argue with the approach of treating your bank with a bit of respect, especially if your business is reliant on funding.

Unfortunately, in practice, many people confuse accommodation and respect with weakness, and fall back on the age-old ploy of trying to beat the other party up.  

This usually results in a sub-optimal relationship for both parties and sees businesses wasting time and resource in a perpetual re-banking exercise.  If you seem to be changing your bank regularly, have you considered that the issue might be you?

Here, at Bishop Fleming’s Funding Advisory team, we are increasingly seeing clients question the strength of their banking relationship.  With a number of our team having worked at banks, we like to think we can give pretty good insight into how to get the very best from your bank. 

Further information

If you would like to discuss how we can help your business, please contact a member of our Funding Advisory team.