Capital Markets

Best of 2009: Banking

The relationship between CFOs and their bankers this past year was rocky at best, abusive at worst. Will they make up in 2010?
CFO StaffDecember 30, 2009

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In late 2008, according to CFOs Business Outlook Survey, 72% of finance chiefs had “moderate” or “significant” concerns about the health of their financial-institution counterparties. With good reason, as it turned out. In 2009 banks’ ailments hit corporate finance departments full force: credit lines were pulled, terms were renegotiated, covenants were tripped, and counterparty-risk surveillance was increased. The contentiousness of the relationship between bankers and their corporate clients was best summed up by Steven Bavaria of DBRS: “When credit was abundant, a gun was at [bankers’] heads to reduce fees and spreads,” he said. “Now some of the same borrowers have to go hat in hand and ask for covenant relief. They shouldn’t expect a warm, helping hand from the bankers.”

And indeed, they didn’t get that helping hand. But CFOs of nonfinancial companies did smarten up and adapt to the new, harsher climate for credit, which CFO monitored throughout the year. The changed approach to bank and lender relationships is likely to remain for some time. Fortunately, as 2009 closed, revived bond and equity markets had bailed out companies that had been hung out to dry by their banks. But for other companies, especially small businesses, the credit crunch lingered. How will banking regulators worldwide prevent a repeat of the past two years? Stay tuned in 2010 as we explore the answers.

A World of Trouble

Europe and Asia agree: Credit is hard to come by and there is little relief in sight.

How Healthy Is Your Bank?

With more failures expected, CFOs should subject their banks to a thorough checkup.

How to Avoid Bank Bailouts

CFOs and treasurers who do business with the biggest banks, insurers, and hedge funds may find it comforting if sputtering ones are red-flagged.

Leadership in Finance: Christina Cook of the Bank of Marin

Five years as CFO of a small commercial bank during one of the most tumultuous financial meltdowns in history has given this 19-year banking veteran a new view of capital, government programs, and serendipity.

Small Consolation

Despite the lip service paid to the importance of small businesses, efforts to ease their credit woes have come up short.

Top Tips for Getting Credit

The key takeaway: do your due diligence on the shrinking universe of lenders as early as you can. And maybe buy some derivatives or credit insurance to make you look less risky.

Tripped Up

More companies are violating loan covenants, but there are ways to avoid taking a hard fall.

Twice the Effort for a Revolver: A Good Deal

It took some doing, but Ducommun is among the few companies able to recently acquire a five-year line of credit with decent terms.

Boxed In

The government’s push to standardize over-the-counter derivatives could severely disrupt corporate hedging programs.

Buyer’s Remorse

Treasury departments are still paying a price for auction-rate securities.