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Relationship banking in a cynical world

This economic downturn is long past the point where banks might normally have started waxing lyrical about their commitment to relationship banking. Anticipating the end of past down cycles and sensing good opportunities ahead to lend, banks would already have tried to appeal to new customers by promising to stick with them through bad times such as those recently endured as well as the good.

Not this time, though. Relationship banking is not the favoured buzzword in any marketing campaigns. It is not the repeated trope of speeches and presentations from banks’ senior executives.

There are two possible explanations for this. One is that banks lack confidence in the economic recovery and don’t actually want to do any new business with new customers, being still preoccupied with the financial difficulties of their existing ones. The second is that the whole banking industry is now so utterly discredited that not even a moron in a hurry would be fooled by any of its guff about relationship banking.

Yet this is precisely the moment for banks and their customers to reconsider the benefits to both sides of establishing the economic basis for more stable and long-lasting partnerships than were in vogue in the years up to 2007.

At the start of January, in his first speech as chief executive of Bank of America, Brian Moynihan admitted the obvious: that the industry had over-lent, consumers and companies had over-borrowed, and we had all overleveraged. This had led to our recent economic crisis.

Too much bank credit was too freely available and transactional banking was the dominant pattern.

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