Greenwich Associates Announces 2013 Greenwich Excellence Award Winners
Businesses Benefitting from Fierce Competition, But Bank Profitability Concerns Mean Coverage Changes May Lie Ahead
Despite new regulations, soaring compliance costs, balance sheet pressures, unfavorable interest rates and soft demand for loans, U.S. banks are investing in their middle-market banking businesses in anticipation of an economic rebound. In this challenging environment, Comerica Bank claimed the highest number of 2013 Greenwich Excellence Awards in Middle Market Banking overall, while Bank of America Merrill Lynch and J.P. Morgan each claimed two Greenwich Excellence Awards in the Mid-Corporate category.
Companies Benefit from Bank Battle for Market Share
The confluence of economic and regulatory headwinds has limited the profitability of traditional banking since the financial crisis. At the moment, there is little doubt that the supply of credit outstrips meager demand from middle-market companies. But rather than pulling back, banks are doubling down with new investments in order to position themselves for an eventual recovery. Companies are benefitting. The middle-market companies participating in Greenwich Associates 2013 research say their banks have not yet expressed significant frustrations over new fees or documentation requirements associated with regulatory compliance. To the contrary, so far, companies report continuing improvements in both the price and terms of credit as well as the service quality they are receiving from their banks.
“Even among companies not interested in borrowing right now, banks are providing good coverage through relationship managers and extra services such as advice on treasury and working capital management,” says Greenwich Associates consultant Chris McDonnell. “The goal is to stay in front of these companies and be positioned to expand the business when the environment improves and they are ready to borrow again.”
Account Coverage Strategies Evolving
Middle-market companies can expect to see changes in their service channels over time. New regulatory costs, capital reserve requirements and other developments have changed the economics of middle-market banking. In order to preserve profit margins, banks have begun rationalizing their resource commitments in a more deliberate manner. The result will be an increasing investment in and reliance on technology to manage the costs to service relationships. It remains to be seen how companies will react to the changes.
Greenwich Excellence Awards
In 2013, Greenwich Associates surveyed nearly 14,000 middle-market companies and over 450 mid-corporates and about their banking relationships. Respondents were asked to name the banks they used and to rate these providers in a variety of product and service categories. Banks that received customer ratings above those of competitors by a statistically significant margin at a 95% confidence level were named Greenwich Excellence Award Winners.
Middle-Market Banking
Comerica Bank led the market by winning 16 Greenwich Excellence Awards in Middle Market Banking in 2013, including 12 National Awards and four Regional Awards. Among the awards claimed by Comerica at the national level were Overall Satisfaction, Likelihood to Recommend and Relationship Manager Capability. First Tennessee claimed 12 awards, including 10 national and two regional citations, and Frost Bank claimed seven national and two regional awards for a total of 9.
Mid-Corporate Banking
In the Mid-Corporate category, which spans companies with annual revenues of $500 million to $2 billion, Bank of America Merrill Lynch and J.P. Morgan each claimed two Greenwich Excellence Awards, while Citi, HSBC and Wells Fargo each claimed one award.