Tighter admission requirements for banks are causing rifts with cash managers and corporate treasurers

More than two in five (44%) of cash and corporate treasure managers have stopped offering international payments. the reason? Their bank ended its relationship with them. This is clearly demonstrated by Banking Circle research conducted on 700 cash managers and corporate treasurers (those ultimately responsible for financial flow in companies) in northern and southern Europe and the UK.

According to two-thirds of respondents (66%), the reason the bank terminated the relationship was that it no longer met the eligibility criteria.

A big problem for companies operating internationally. Some companies have been told that they have been ‘de-risked’ (de-risked) by their banks at such short notice that they are no longer able to find an alternative provider in time. 44% of them are no longer able to make international payments.

Spread of risk

In order to spread the risks they face, people increasingly work with correspondent banks (through which international payments are now made). Banking department experts say this is likely a response to the trend of reducing risks. People will feel obligated to spread their risks by working with a greater number of banks. However, the vast majority (80%) of cash managers and corporate treasurers fear that correspondent banking costs will continue to rise in the coming years.

More relationships also mean that more resources are needed to ensure that these banking collaborations run smoothly. This increases customer costs and reduces profitability. It’s not entirely irrational that not everyone is happy with this trend: 65% hope to be able to reduce the number of banking relationships.

Not only do survey respondents see a decrease in the number of banking relationships for themselves, but they also believe that this is a good thing for the global economy. Nearly three-quarters (71%) believe that finding an alternative to international payments would benefit the global economy.

Better for the world

Markus Jarbaugh (head of Benelux sales at Banking Circle) calls it a “huge shame” that the increasingly stringent eligibility criteria imposed by banks means international payments are no longer available to “such a large portion” of cash managers and corporate treasurers. “The global economy is expected to grow and international payments are critical to achieving this.”

“It is 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.”