Poor working capital product-mix pushes CFOs away

The finance chiefs of Asia's 1000 largest corporates are becoming increasingly dissatisfied with the short term debt and liquidity management products offered by their main banking providers, according to research run by the newly established Asian office of banking consultants East & Partners.

The firm's Asian Institutional Transaction Banking Markets report - based on a sample of organisations with average annual revenue of over US$1 billion - found that short term debt and liquidity management were rated as the most important products by CFOs and corporate treasurers out of nine products rated.

Despite their high importance to corporate customers, satisfaction levels for both products are the lowest out of the nine variables surveyed, and by some distance, according to Lachlan Colquhoun, chief executive, East & Partners Asia.

"The other products are more about processing and systems," Colquhoun said, adding that "liquidity support and short term debt really test the bank's commitment to clients and just what they are prepared to do."

This translates into higher churn rates, with the May ATB report showing that a change in primary transaction banker was either "definite" or "highly likely" for 25 per cent of Asia's Top 1000.

"Both products are key components of an integrated working capital solution but it is clear that, across the board, banks are not delivering to their clients," Colquhoun said.

"This presents as a major opportunity for a bank which gets this even half-right in Asia."