More than two-fifths (44%) of money managers and corporate treasuries have stopped making international payments. The reason? Their bank ended their relationship with them. This is evident from Bank Circle research among 700 money managers and corporate treasurers (those ultimately responsible for the flow of funds in companies) in northern and southern Europe and the United Kingdom.
According to two-thirds (66%) of respondents, the reason for terminating a banking relationship is because they no longer meet eligibility criteria.
A major problem for companies operating internationally. Some firms who have been ‘de-risked’ (de-risked) by their bank have been told on such short notice that they could not find an alternative provider in time. 44% of them were then unable to make international payments.
Contagion risk
People increasingly work with correspondent banks (through which international payments are now made) to spread their own risks. This could be a reflection of the risk reduction trend, say banking experts. People will feel obligated to spread their own risk by working with a large number of banks. However, the majority (80%) of money managers and corporate treasuries fear that correspondent banking costs will continue to rise in the coming years.
More relationships also mean more resources are needed to ensure these bank collaborations run smoothly. This increases customer costs and reduces profits. It is not entirely unreasonable that not everyone is happy with this trend: 65% believe that the number of banking relationships can be reduced.
Not only do respondents want to reduce the number of banking relationships they have, they also think it’s good for the global economy. Almost three-quarters (71%) of them believe that an alternative to international payments would benefit the global economy.
Better for the world
Marcus Yarbug (head of Benelux sales at Bank Circle) calls it a “huge shame” that banks’ increasingly strict eligibility criteria mean international payments are no longer available to “such a significant part” of money managers and corporate treasuries. “The global economy is only expected to grow and international payments are critical to this.”
“It’s time for banks to realize this and seek cooperation to make international payments easier and more accessible. Only in this way can we successfully face the future,” Yarbak concludes.
