Corporate banking customers are valuable assets of a bank. Instead of just serving the needs of corporate clients, 'relationship managers' get to know their clients and their business needs by building and maintaining ongoing relationships.
Following a global trend, the 'Relationship Management' concept is now becoming increasingly popular for banks operating in Bangladesh. At present, 56 scheduled banks are operating in Bangladesh. Of these, a few are in centralised operation following accepted business matrix. No doubt, the centralised banking operation, based on business matrix and true relationship management concept were introduced by foreign banks in Bangladesh, with pioneering roles played by ANZ Grindlays, Standard Chartered, HSBC, Citi NA. Eastern Bank Ltd. (EBL) and The City Bank Ltd. (CBL).
The definition of corporate banking varies from bank to bank based on turnover, workforce, credit facilities etc. In general terms, retail banking deals with individuals and companies and corporations are looked after by SME (small and medium enterprises) or corporate banking.
One of the primary roles of a relationship manager in corporate banking is sales. He or she will have a quota and regular goals to meet. He or she will research new business prospects and pitch the companies with their respective banks' products. Establishing new lines of credit and investment accounts for their clients, developing prospect lists for additional recruitment, making presentations and preparing spreadsheets and documents supporting the value of their products and services are some of the other responsibilities.
When a relationship manager is new to a bank, he or she may be given existing clients to manage as well as a territory or industry to solicit. Part of his or her responsibilities as a relationship manager is to periodically review the existing accounts of all clients. Reviewing accounts should be done at a certain interval for all accounts that a relationship manager is assigned to. It may be an existing portfolio or newly solicited portfolio by him or her.
A relationship manager should review investments to make sure his or her clients are taking advantage of the best options and offer additional lines of credit when appropriate. He or she will analyse each client's current financial status through spreadsheets and analytical programmes to make sure they are taking advantage of all the products and services a bank has to help each business grow and prosper with little risk.
The relationship manager will monitor the account very closely including sales follow-up, routing of sales through bank, utilisation of existing credit limits, forecasting of one-off or seasonal facilities. He or she will monitor the industry trend evaluating the client's performance on regular basis, raising flags any time if required for any material shifting of current situation. Being updated with the recent industry and regulatory trends and keeping the clients posted accordingly, are the do's for a skilled relationship manager.
The relationship manager must be very vigilant over any situation, find out its root cause and prepare a future action plan. If any accounts suffer from the same situation continuously, the primary responsibility of a relationship manager to find the cause, chalk out a plan to get rid of the situation and involve others including risk and top management raising early alert, if required.
For example, a customer may have structured a credit facility wrongly. It will be the relationship manager who would first address the issue and take necessary approvals. The situation may be the result of a sudden fall in market prices of raw cotton. Eventually, there may be a huge inventory pile-up and drop in sales for majority of spinners at a particular point of time. No doubt this situation most likely will hamper regular payment track of most of the spinning mills in the country. The relationship manager shall address the issue finding proper bailout plan.
When a bailout plan is unlikely to work out further for any reason, setting a successful exit plan is a must for a relationship manager.
Stock inspection and factory visits are the two periodic housekeeping requirements for any relationship manager. The purpose of regular stock inspection is to find out whether there is any stock shortfall and whether the working capital extended to the customer for the procurement of inventory is properly utilised without any fund diversion. To find out the stock shortfall or excess, calculating drawing power is a common method for many banks.
The formula allows finding the inventory in total (finished, work in process or raw materials) and book debts vis-à-vis current level of working capital extended by all banks against inventory and receivables. As seeing is believing, conducting regular factory visits is a part of regular due diligence process. A relationship manager must know where exactly the credit facility has been extended and whether factory is operative at its desired level or not. The due diligence during factory visit has been extended so far that a relationship manager must observe whether there is any child labour in the factory during the visit, whether the ETP (Effluent Treatment Plant) is in operation or whether the factory is engaged in any activity that is detrimental to the environment etc.
Ultimately, relationship managers are the primary financial advisors to the companies with whom they form relationships. It is up to a relationship manager to utilise their research to find out where the company needs help. A person holding this position will know when a merchant needs to upgrade credit card services, for example, or take advantage of tax credits by leasing rather than purchasing new equipment.
A relationship manager should call on his or her client list regularly whether they have something to sell or simply to give advice if needed. Relationships develop so that he or she should be on a first-name basis for the business owners or key decision makers; know their birth dates and how many children they have. Successful relationship managers also know when their clients need outside help and make referrals when necessary.
The writer is Senior Vice President and Unit Head, Corporate Banking, The City Bank Ltd.