A recent Greenwich Associates survey of European companies, see, showed that when companies make their initial forays into international business, they often call on the services of one or more of the largest global banks.

As local business expands and deepens

Often these banks are existing relationships and have the types of broad international capabilities and networks required to meet companies’ needs. A key factor in the decision-making process becomes who can best advise them of the pitfalls and opportunities associated with entering a particular country. 

However, as companies’ businesses expand and deepen in foreign markets, they often have developed the necessary skill sets and processes to manage these tasks.What they now need is local infrastructure support, local credit lines and experience with local regulatory subtleties. At this point, companies often begin to consider employing local banks, see figure:

Corporates' banks in Europe

Greenwich Associates report that:

• “The banking groups used by large European companies are shrinking. After briefly spiking during the chaos of the global financial crisis, the average number of banks servicing big European companies has returned to the downward trajectory that started a decade ago. In 2005, the typical large European company with at least €500 million in turnover used approximately 12 banks, with two to three of those banks considered lead relationships. In 2014, the overall average declined to fewer than 10 banks, with approximately two lead relationships on average.”
• “The contraction of corporate banking groups has accelerated in the post-crisis era. The establishment of Basel III capital rules and other new regulations has caused many European and global banks to abandon past strategies aimed at capturing market share and revenues in favor of maximizing profitability. As part of that shift, they have become much more deliberate in segmenting their clients, pushing resources toward those offering the greatest profit potential while cutting back resource allocations or even severing relationships with smaller and less lucrative accounts.”
• “These break-ups are not always initiated by banks. From companies’ perspective, bank relationships are often (but not always) driven by one thing: credit. As one corporate research participant said: “Our core banks lend to us. No lending, no call. Simple.” Although European companies have made aggressive use of capital markets amid an extended run of highly favorable conditions, Greenwich Associates research shows clearly that many companies regard the security of bank credit lines as an absolute imperative.”

Overall shares in Europe

Greenwich Associates survey data revealed that in Europe:

• BNP Paribas is leader in European Top-Tier Large Corporate Banking Market Penetration and Large Corporate Cash Management Market Penetration
• BNP Paribas is leader in Eurozone Large Corporate Banking Market Penetration and Large Corporate Cash Management Market Penetration
• BNP Paribas is leader in European Debt Capital Markets Market Penetration - Corporates 
• Leading banks in other categories included HSBC, and J.P. Morgan.

—————

*Methodology

Greenwich Associates conducted 3,055 interviews with financial officers (e.g., CFOs, finance directors and treasurers) at corporations and financial institutions with sales in excess of €500 million, including 1,238 with sales of at least €2 billion.

Interviews were conducted throughout Austria, Belgium, Denmark, Finland, France, Germany, Italy, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom and took place from August through November 2014.

Subjects covered included bank credit capabilities, domestic and cross-border advisory capabilities and equity underwriting capabilities. Cash management and debt capital markets capabilities were examined in separate interviews with corporate treasurers.

---

CTMfile take: BNP Paribas have finally done it: according to Greenwich Associates for European top-tier and large corporates they are now the no. 1 cash management bank. Congratulations.