Summer, for most of us, is a time to recharge our batteries, to relax, to enjoy some calm before the demands of life pick up again.  Unfortunately, investors have made that a good deal harder recently as they collectively removed over a trillion dollars in value from financial markets over the course of a few days. Read More »

In the struggle to capture credit demand and manage risk, banks are finding that their RMs lack the expertise and time to efficiently manage credit responsibilities while also driving new sales and acquisition, and centralized credit teams lack the understanding of local geographic markets to make optimal credit decisions based on firsthand knowledge of customers. One leading bank overcame this challenge by creating a specialized credit underwriting and decision role in local credit markets to support and complement the RM sales function. Read More »

The News: The commercial paper market appears stable despite S&P’s recent downgrade of US debt. It’s a good piece of news amid a bleak economic landscape and suggests that – whatever challenges the US might face – banks and companies are unlikely to see a repeat of the 2008 liquidity crunch. Read More »

Today’s business bankers have a difficult task. They must sell more, but they have lower risk thresholds and more high-risk customers. And as evidenced by the market chaos of the past couple of days, the economy remains extremely volatile. How can RMs help customers navigate uncertain terrain and still protect the bank?

See how one bank generates revenue by helping customers better manage risk. Read More »

The News:  The European Court of Auditors recently found that the EU’s loan guarantee program is supporting many SME enterprises unnecessarily. This program was intended for businesses that could not obtain funding from traditional commercial lenders. However, the European Court of Auditors explains that almost 1/3 of projects that have received funding could have qualified for traditional commercial loans. The European Commission defends the loan guarantee program, explaining that it would be too difficult to target only the SMEs that genuinely need the support.

Our View: The EU’s difficulty discerning between SMEs that do and do not require a loan guarantee mirrors the same challenge bank executives face. Good quality credit customers exist but are difficult to identify among the high number of challenged businesses.To succeed, banks need to evaluate small businesses more closely to identify those that could qualify for traditional commercial credit. Creating specialized RM risk identification and credit underwriting roles enable banks to better target businesses that are (or can be rehabilitated to be) high-quality credit customers.

How Can We Help: See how two banks increase credit volumes by specializing credit roles, and enabling staff to develop a more accurate understanding of business risks and credit opportunities.

In an effort to grow credit in today’s risky environment, business bank executives are looking for ways to get their sales and risk management teams to work better together. See how one bank creates a mutually beneficial partnership between its credit officers and RMs to improve credit quality and volume. Read More »

It’s stunning to meet with the world’s most profitable and best-managed banks and see the same problem over and over again.  The always troubled relationship between Credit and front-line RMs has deteriorated to new dysfunctional depths, with devastating impacts on RM productivity. Here’s the story that emerges after a little probing.

Most of today’s RM’s grew up in an easy credit environment and few were actually around in the last real recession in 1990. Those RM’s that were successful and stayed in the business learned what a good deal looks like, developing a sense for which  loans were likely to get through the credit process and make their effort worthwhile. They were and are productive because they figured out how to invest their time in pursuing credit opportunities that had a high probability of approval.

And then the rules got turned upside down and–even  in those banks that have become some of the best performers in the crisis–we hear the same stories about how RMs don’t know what a good deal looks like in this new environment, chasing deals that they think make sense based on their experience but the rejection rates keep getting higher and higher.

I’ve asked this question many times in recent meetings with Credit or Sales – and there usually is an uncomfortable silence and a shocked recognition that they actually don’t know.

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