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Banks Increase Pricing For Credit

The 'credit crunch' and changes in capital adequacy requirements have seen banks attempt to increase their income from lines of credit extended across our entire client base. We are seeing increases in both fees and margins for short term working capital lines and a tendancy to restrict the use of overdrafts in favour of LIBOR linked facilities.

The fees and margins for term debt have also increased. Our experience is, however, that it remains a competitive market place and banks do want to lend to good quality covenants. Whilst working with clients, we have been able to mitigate some of the increased costs and if your bank is attempting to increase its income from lines of credit then it is probably a good time to review the whole relationship to ensure that in overall terms pricing and charges remain competitive.

Reducing costs in the Charity sector

The economic downturn has hit the charity sector with most UK charities expecting donation income to fall over the next 12 months.

This prospect is driving charities to look harder for ways to reduce costs and improve efficiency. Focus on Banking has now worked with 10 major UK charities in the last 18 months and has been able to generate savings in banking and credit/debit card acquiring arrangements of well over £500,000.

Joint Procurement for Local Authorities

The profile of procurement in local authorities has been raised in the last few years through a number of Government publications and reviews. All local authorities are now considering options for procuring good/services on a joint basis with neighbouring authorities.

Whilst undoubtedly for certain types of contracts, authorities will benefit from economies of scale, this does not necessarily apply to banking. In fact banks have tended to show little appetite for complicated joint contracts and will not usually offer discounts or reduced pricing when several authorities collaborate.

Law Firms Become Critical Customers For Banks

The credit crunch has seen the competition between banks for the client balances that law firms hold increase. At the same time, firms have increasingly become concerned about the safety of the balances. Given that banks are also restricting the use of Base Rate linked facilities and increasing margins and fees for credit lines, the dynamics of firms’ bank relationships are fundamentally changing.

Maintaining and increasing client balances held has become a key target for banks and there has never been a better time to review relationships.

We have now worked with more than 65 of the UK’s largest professional firms and the number continues to grow.

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Law & Property Firms - Banking Our work for professional firms is bespoke to individual clients' needs but focuses on benchmarking banking and cash management arrangements to peer firms and the wider market place. The Rationale: Professional firms are lucrative customers for banks because of the size of client balances held and the income this generates. For many firms, however, banks are important clients and/or providers of finance to the business. When benchmarking, we aim to review all aspects of the banking arrangements and identify where terms can be improved and costs reduced without damaging relationships. Whilst undertaking this process, it is common to have to identify areas where banks are absorbing costs (and not levying charges) and to offset this against income earned elsewhere in the relationship. It is vital that entire relationships are benchmarked in order that fair but competitive terms are requested. It is common for significant savings to be identified as a result of reviews. The Service: Benchmark of bank tariffs to the market place and if appropriate identification of charges not levied Comparison to the market place of interest rates paid on client and office balances by banks Review of cash management structure in place/offered by banks Review of borrowing arrangements and terms Accuracy of charging and interest calculations checked and errors identified Formulation of strategy to approach banks to maximise the savings identified Interpretation of Law Society/RICS rules surrounding payment of interest to clients benchmarked and compared to peers Comparison of internal processes and use of the banking system to peers and the market place The Benefits: Reductions in bank charges Significant improvements in cash management (reduced interest costs/increased interest income) Increased internal efficiency and improved use of the banking system Useful comparison to peers [go back to top of page]	News Banks Increase Pricing For Credit The 'credit crunch' and changes in capital adequacy requirements have seen banks attempt to increase their income from lines of credit extended across our entire client base. We are seeing increases in both fees and margins for short term working capital lines and a tendancy to restrict the use of overdrafts in favour of LIBOR linked facilities. The fees and margins for term debt have also increased. Our experience is, however, that it remains a competitive market place and banks do want to lend to good quality covenants. Whilst working with clients, we have been able to mitigate some of the increased costs and if your bank is attempting to increase its income from lines of credit then it is probably a good time to review the whole relationship to ensure that in overall terms pricing and charges remain competitive. Reducing costs in the Charity sector The economic downturn has hit the charity sector with most UK charities expecting donation income to fall over the next 12 months. This prospect is driving charities to look harder for ways to reduce costs and improve efficiency. Focus on Banking has now worked with 10 major UK charities in the last 18 months and has been able to generate savings in banking and credit/debit card acquiring arrangements of well over £500,000. Joint Procurement for Local Authorities The profile of procurement in local authorities has been raised in the last few years through a number of Government publications and reviews. All local authorities are now considering options for procuring good/services on a joint basis with neighbouring authorities. Whilst undoubtedly for certain types of contracts, authorities will benefit from economies of scale, this does not necessarily apply to banking. In fact banks have tended to show little appetite for complicated joint contracts and will not usually offer discounts or reduced pricing when several authorities collaborate. Law Firms Become Critical Customers For Banks The credit crunch has seen the competition between banks for the client balances that law firms hold increase. At the same time, firms have increasingly become concerned about the safety of the balances. Given that banks are also restricting the use of Base Rate linked facilities and increasing margins and fees for credit lines, the dynamics of firms’ bank relationships are fundamentally changing. Maintaining and increasing client balances held has become a key target for banks and there has never been a better time to review relationships. We have now worked with more than 65 of the UK’s largest professional firms and the number continues to grow. Contact Us Email Us
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Law & Property Firms - Banking