Corporate boards are demanding more detailed information from treasuries in the face of perceived increased financial risks
The counterparty risk of bank partners is a close concern of treasuries, with long-term risk an acute concern for some
Proposed compulsory central clearing for derivatives poses dilemmas for corporate treasuries that are hard to resolve
The proliferation of new regulations often far from limpid is problematic for treasurers and their partner banks
The upcoming hard deadline for the Single Euro Payment Area is not a cause for concern for most treasuries; for some it is irrelevant and in any case easily handled with existing IT
Pressure on banks capital from Basle III means increased consideration for what is of optimal mutual benefit for corporates and their banks
MV, Wolseley When I first came into treasury in 1981, exchange controls had only just been removed, so the first FX contracts I settled were compliant with exchange controls. Operationally the treasury has changed vastly over that period, but it still looks after the same things and has the same basic functions. My job is still, and always will be, to arrange the lowest after-tax cost of funding for the group and to make sure the money is always there to pay debts when they fall due. That has not changed in 30 years. The way the treasury interacts with the rest of the business has changed completely over that period but that is not a treasury issue.
What has changed since the crisis? The most important change is that boards, and nonexecutives in particular, have increased their focus on the peripheral financial risks that treasuries have handled well for a long period of time. One example is counterparty credit risk. In the past, you might get the occasional question about whether we were exposed to a bank that went broke. Now people want to see quite in-depth reports, which are really of little interest for most operational treasuries.
People expect a very quick response to certain questions. Over the summer, some directors wanted to work out our response to a total collapse of the euro. We responded within two days, because we had been thinking about it for years. But what was amazing was the speed with which we were expected to respond once a risk had been perceived. Fortunately, most issues have been thought about extensively, and therefore we can quickly respond.
MC, National Grid It has gone from: Oh, theyre the people that sit in the office at the end of the corridor and do something to: Oh my God, the world is running out of money, are we okay?
Treasurys profile and peoples expectations have changed. Before 2007, the idea of a board question about liquidity do we have enough back-up lines? just would never have happened. Now we appear in front of the board on a fairly regular basis to discuss in detail which banks provide our liquidity, and whether they will continue to be able to do so. Equally, five years ago most people hadnt heard of counterparty risk and then suddenly it is the most important thing in the world, and everyone wants to understand our exposure and how it is managed.
The profile of treasury has changed a great deal: people now understand its importance. It means you can be slightly more demanding. Like many corporates, we have suffered from pretty poor cashflow forecasts in the past. Once you point out that we need to keep £1 billion in cash because we never know when the cashflow forecast will move by £500 million and you are receiving zero return on that money as a deposit in a bank which may or may not be there tomorrow then suddenly people do worry about cashflow forecasts. Quality overall has improved dramatically, not just because systems and processes have changed, but because people focus on treasury more, and understand its importance.
MOB, RBS Certainly the importance of visibility has increased. Not long ago, many treasuries cashflow forecasting was relatively manual. Transaction banks are trying to deliver visibility in an efficient manner so that we can help treasurers with the demands they receive from their boards about counterparty risk, for example.
MV, Wolseley The change that has occurred in boards over the past several years is an increased understanding, not of volatility because I think boards already understood that but of genuine risk: big market dislocations and the need to prepare for them. While boards were always interested in things like foreign exchange fluctuations there is now an interest in the rare, large-scale events that really disrupt business and how to address them.
JS, Lloyds This crisis has been about the importance of liquidity not just the access to credit lines that provide liquidity. All the conversations are about where money is, its safety and its accessibility. Only then do people ask if they are making a decent return.
MM, Barclays We have a lot of discussions with customers about how they manage counterparty risk: we have a good understanding of the credit lines corporates have for banks whereas it used to be the other way round. We need to understand how customers look at risk. Some have become sophisticated and use CDS spreads coupled with counterparty ratings and calculate and report counterparty limits on a daily basis or maybe even hourly. Consequently, it has become more important to understand the treasury processes so we can position meaningful products to our customers.
The other issue that needs to be factored in is sovereign risk. The dialogue with clients about Europe has changed and we spend a lot of time discussing developments, what it means from a funding perspective, and what is a worst-case scenario.
LN, Euromoney Can the corporates here tell us about how they assess the counterparty risk of their bank partners and how that process has changed over the crisis period?
MV, Wolseley When I started my treasury career at Dunlop, the company had been severely hit by the recession of the early 1980s and had cashflow and funding problems. So I learned about the importance of liquidity at an early age the scars are still there! I always vowed that I would never again be in a company that runs out of liquidity or even gets close to it. I also quickly learned that you have to understand the risk that exists in relying on your banks. We are probably at the medium-to-crude end of the spectrum in terms of assessing counterparty credit risk: we only make deposits or transact derivatives with the banks that use their balance sheet to fund us.
LN, Euromoney So how do credit ratings and CDS spreads fit into that thinking?
MV, Wolseley We set a counterparty limit for all of our relationship banks based on their public ratings and their CDS spread. The limits are reviewed by the treasury committee quarterly. CDS are tracked in real time and reported weekly. However, on a daily operational basis my team will adjust limits informally, depending on the circumstances. It is an effective method. Given the amount of cash that we have and the fact that it is only out for a week or two, we are running a small risk and we can respond if something becomes dysfunctional. But if we had more cash and invested it for longer, then we would need a more sophisticated system.
Operational risk whether we can continue to operate is the bigger concern for us. We need to know the impact on our funding, not next week but in three or four years time when Basle III is implemented, for example.
MC, National Grid For us, counterparty risk is not so much related to cash as to derivatives. I am less worried about where my money is for a week or a month although I have limits and monitor them carefully. However, if I have a 20-year cross-currency swap or a 30- or 40-year interest rate swap, I need to know that the counterparty will be there in 30 years time. We factor in all of our derivatives, mark them to market on a daily basis, put in a margin for future potential exposure, and consider the implications for our bigger counterparties. We also put a credit support annex in place, and depending on the CSA we do fairly regular margin calls against their thresholds.
LN, Euromoney Has treasury been given additional resources to cope with the new demands placed on it?
MV, Wolseley Ive never had a problem about getting resources for treasury. Technology has been our friend: our TMS system is effective, and we can do our foreign exchange through platforms like 360T. That has liberated capacity and it means the team have been able to move into other areas when they arise.
The trick is to think about potential problems in advance, so theres no need to scrabble around to do research. My boss said: "We need to have a plan about what happens if the euro implodes." We were able to give him a framework within a couple of hours because we had been following the issues evolution for a long time. We considered a scenario with all countries leaving the euro simultaneously and the introduction of exchange controls and capital restrictions; within two days the paper was approved by the CFO and within a week it had been implemented. That was only possible because we had prepared months in advance.
LN, Euromoney Did you draw entirely on internal resources or did you talk to your banks about the potential implications?
MV, Wolseley We had talked to a few banks over the preceding three months and a couple of sets of law and accountancy firms that had been promoting ideas regarding a possible demise of the euro.
MC, National Grid The difficulty comes in defining implode in this instance. The worst scenario for National Grid was Germany leaving the euro Greece is irrelevant for Grid because I had a series of German Schuldschein loans in place, crossed into sterling. The Schuldschein was under German law but the cross-currency swap was under English law: potentially creating a basis risk, because the cross-currency swap would remain with the euro but the underlying loan would probably, under German law, go to a new Deutschmark.
MV, Wolseley Our scenario was an extreme one and highly unlikely but it was very useful in helping to position ourselves. What was interesting was that initial suggestions were to move surplus euros into sterling. But a moments reflection showed it was not a good idea: the last thing you wanted was suddenly to move currency from somewhere like Germany into sterling, and then find that Germany leaves and the Deutschmark appreciates through the roof, leaving you with large exchange losses.
LN, Euromoney Other than the potential implosion of the euro, what are the treasurys greatest concerns currently?
MC, National Grid The combination of derivatives regulation and Basle III could mean that while corporates have an exemption under European Market Infrastructure Regulation [Emir] and Dodd-Frank from central clearing, Basle III requires banks to allocate so much more capital to uncleared derivatives that they become uneconomic. Corporates would then have to either give up the exemption for central clearing or use CSAs with zero thresholds and daily margin calls. I have been looking at systems for this, and they do not exist today because there is no standardization under CSAs. Systems providers arent even bothering to look at it right now because nobody knows how centralized clearing and zero-threshold CSAs will work.
My nightmare scenario is that in a year or twos time we find ourselves having to do daily margin calls or central clearing with no systems. I would need five more people just to maintain Excel spreadsheets and move hundreds of millions of pounds of cash around every day just on CSAs that will be a hard sell to the board.
MV, Wolseley The biggest complication in operational treasury is regulators. There seems to be an endless stream of increasingly complex regulation and reporting requirements and it is questionable that it is actually reducing risk and improving the financial system.
MC, National Grid Regulation is moving risk around from banks to a central clearing counterparty, which is in theory insolvency remote. But actually if it goes wrong, unwinding it will still be a mess.
Some of the problems associated with regulation were highlighted recently when the European Parliament approved new credit rating rules it is impossible to find out what they have actually approved. The original proposal from the European Commission was a year ago, the EU approved something different to Parliament, but no details exist of what Parliament has approved. So we are operating under new credit rating regulations that are unknown.
MM, Barclays Whether there is over-legislation at the moment depends on who you ask; as an international bank obviously we have to follow legislation and regulations in all of the countries in which we are active. It has led to a situation where an increasing part of banks investment is simply for regulatory and mandatory requirements. That leaves a smaller pot for true innovation.
JS, Lloyds There was an article recently that suggested the City will have to hire 70,000 people for regulatory management. Is it creating economic value? At some point some of the costs must end up filtering through to clients.
MC, National Grid In my opinion, more regulation and better regulation are diametrically opposed. Sarbanes-Oxley was a reaction to Enron. But it was US accounting standards that caused Enron. Principles-based accounting rather than rules-based wouldnt have allowed Enron to create its off-balance-sheet vehicles. However, instead of committing to principles-based regulation if it doesnt smell right, its not right the answer is always to create more rules.
LN, Euromoney In the quagmire of new regulatory initiatives, is anybody there to help guide you?
MC, National Grid Banks are supportive. One of the banks represented here presented on regulation to our board. But ultimately you have to make your own judgement.
MM, Barclays There are certain parts of new legislation that require better dialogue between banks and customers. For example, it is important to discuss the new liquidity rules with customers: how we price liquidity, what we must put into the banks liquidity buffer, which liquidity we can actually use. Similarly, on the trade finance side, it has become more important to think through how to optimize product provision to clients across the entire spectrum to maximize their benefit within the changing regulatory framework.
If you understand how we price a deposit and why, just to pick a simple example, corporates will understand the potential benefit to them of moving to a notice account as opposed to a term deposit in order to maximize the benefit for them and the bank.
MOB, RBS Changing regulation has an impact on the relationship between banks and corporates: we have to be more transparent about the impact on a specific relationship. However, establishing a trusted adviser relationship and a true partnership can only come with time and being able to show competency in particular product areas. Banks have to be honest about what they are good at with clients they cant be all things to all clients anymore. Rather than bringing in a suite of products where we think there may be a fit, a more tailored proposition is required. You do also have to take the time to walk through the impact of some of the regulations such as Basle III on the wider relationship and what that means in terms of pricing dynamics.
MC, National Grid Having a relationship manager [RM] that understands your business and is willing to bring the right people in rather than just sell big-ticket items like M&A is hugely important. What I really care about is transaction services and liquidity and derivatives. Having an RM that understands that and delivers it is what defines a good relationship bank.
MV, Wolseley We have always taken the view that we need lots of banks because we have lots of branches. We have over 1,200 branches in the US so we need four banks in the US at a minimum. We have over a dozen peripheral banks in the US just to be able to collect cash, and we have four branches in Alaska most people cant even name four towns in Alaska!
We focus on geographic spread and product spread with the banks, and having a long-term relationship. Our business is based on having close relationships with suppliers over a long period, and we see the banks as suppliers of debt capital. So ultimately we want relationship managers who understand our business.
We sit down with all our relationship managers and say: "What are the products you want to sell to me over the next year?" There are lots of touch-points in my organization for example, consumer finance in the US and purchase cards. They dont take up much of the banks balance sheet and they bring us closer together with our relationship banks rather than allowing the business to go to other suppliers. Having relationship managers who really understand their bank and understand us well enough to find those points of common benefit is key.
MM, Barclays We frequently hear from customers that cards and consumer finance are the foundation of a good relationship. More generally, banks have to be good at providing basic services in a fairly sophisticated way, as opposed to sophisticated, high-end services only. Day-to-day banking defines a lot of our relationships with clients.
LN, Euromoney Have the banks restructured themselves adequately to address these basic needs or are they still focused on the big-ticket items such as M&A?
MC, National Grid Certainly, the scale of return on M&A is eye-watering relative to cash management or cards.
MV, Wolseley Our biggest expense is clearing credit cards! Only 15% of our turnover is on credit cards, but that is over £2 billion per annum and it costs well over 1%. It makes any of the fees we would pay on any M&A transaction we do in any one year pale into insignificance.
MOB, RBS Reciprocity is key to a relationship and can only be achieved through knowing the clients business and where their needs best match the banks capabilities you have to prove yourself. We still have to make it easier from a corporate perspective to have clarity on the banks product competencies.
LN, Euromoney There is now a hard deadline of February 2014 for the move to Sepa [the Single Euro Payments Area] but take-up is still low. Sepa credit transfers still represent only 30.2% of all credit transfers in the euro area while Sepa direct debits are 1.9%. What is holding back take-up?
MM, Barclays Over the past years, Sepa take-up has been slow not only by the corporates but also by governments. There are still a number of countries that do not pay pensions and social security through Sepa. However, it is also a reality that in just 13 months time a switch will have been made. Banks and corporates are therefore stepping up their efforts to become Sepa-compliant. The good news is that there are a number of solutions out there to help corporates become Sepa-compliant without a massive reorganization of the back office. There are still many corporates that see Sepa as a regulatory issue rather than an opportunity. But over time I hope Sepa will come to be seen as an opportunity to consolidate processing across the eurozone countries and beyond.
MOB, RBS We are very focused on increasing awareness among corporates. Certainly many corporates are only just beginning to think about Sepa. We did a roundtable recently and around 50% of the group were only just starting to think about their response to Sepa. Attention is focused on the mandatory compliance issues now rather than any benefits resulting from Sepa bank account rationalization will be some way down the track.
There are still some uncertainties that will be clarified in the coming months; the country plans should be released by February 2013. Some of our large corporates are wrestling with mandate migration, and it will be helpful to have clarification. More generally, there is the issue of interpreting some of the legislation. There is a huge volume of information so it is certainly a challenge for corporates in terms of available internal resources. In the absence of deploying consultants, which few are in a position to do, banks need to be there to provide support and guidance.
JS, Lloyds I have always talked about Sepa as being a solution looking for a problem. The lack of take-up suggests that may be near the truth. However, there is a fantastic opportunity, especially for smaller companies that have business overseas but not scale. There are customers that want to simplify their treasury operations. Five years ago they might have established a shared service centre with a big enterprise resource planning installation. Now they cant afford that and Sepa direct debits could be the answer to their receivables problems. The big winners in Sepa will be the mid-caps rather than the top-end customers. Typically over 50% of mid-cap UKs overseas activities are into the eurozone anyway, and Sepa gives them a way to improve efficiency.
MC, National Grid We dont make a huge number of euro payments and have very little euro income. Payments we make in euros are mainly interest on bonds, so there are not a huge number of transactions. We have looked at Sepa but quickly realized it is easier just to put payments through Swift, which we use for all of our payments processing.
MV, Wolseley Sepa is also a bit of a non-event for us despite operating across Europe. We are really a multi-domestic business: each business operates only within its country it doesnt export and it effectively buys the vast majority of its products in that country. Consequently, there are few inter-company flows and few flows outside the country. Instead, our requirement is for effective local banking arrangements. So all that happens is that as each country moves to Sepa we move with it. We are not seeing any particular benefits some reduction in cost and some improvements in reporting but it is about as exciting as putting an upgrade in our TMS really. It takes that sort of level of planning. We dont expect many benefits from Sepa so we are relying on our banks to move us as it occurs we have nothing bad to report.
LN, Euromoney Has Sepa not presented an opportunity for you to streamline and standardize processes across Europe, or even consider a more centralized business model?
MV, Wolseley Each company has to focus on how it interacts with its customers, and the banking system in each country determines the rules by which we play. The fact that we have a consistent set of rules now makes life a little easier, but the process by which we interact with customers is fairly standardized across each company anyway: that is what policies and procedures are there for.
In terms of Sepa driving greater centralization, that is a solution looking for a problem. We dont have that problem so we dont need to change the model. It is on public record that we invested heavily in an aborted IT system. This included a payment factory in central Europe that was scrapped before it was implemented. Our business model doesnt work like that, and it is highly unlikely that we would consider moving to such a model.
Payment systems are only a small part of what our business is about. More important is managing relationships with suppliers and customers so centralizing in Europe does not work. It might be great in theory but its hard to make work in practice.
MM, Barclays I understand why Sepa is potentially less relevant for the two businesses represented here but it is relevant for a significant number of businesses, such as utilities or insurance companies where the payment is an integral part of their value chain. In those circumstances, centralizing payments makes a lot of sense because it reduces costs and gives economies of scale.
The number of companies that have implemented Sepa processes or are even aware of the relevance of the topic is still reasonably low. Banks need to do more to talk to clients about it and see how it can be relevant. At the same time, corporates need to think about how they make payments today, what customer data they have available in order to effect those payments, how they pay their suppliers and what can go through a new payment mechanism like Sepa. Sepa is 13 months away; if you need to go through a comprehensive systems upgrade you had better get started.
LN, Euromoney Is there still time for companies to look at Sepa as an opportunity for instance, as part of a broader adoption of ISO 2022 XML by the treasury rather than just being a compliance requirement?
MM, Barclays Thats a valid point. Sepa is both a challenge and an opportunity, but given the short timeline and the uncertainty there has been in the run-up to the end date for example, in Germany they had to pass new legislation to make mandate migration possible the opportunity to make the move to Sepa part of a bigger process is now limited.
MOB, RBS There is still education needed. There are clients that are looking at the broader benefits of Sepa, but it is a small universe.
MV, Wolseley How many corporates will see a major benefit from Sepa? Making systems more robust and standardized will always get our vote but there is not enough to justify a business case. There can be very few people who can really make a strong business case for moving to Sepa on a standalone basis.
MM, Barclays There are very few organizations that have moved their entire back office to ISO 2022 XML because of Sepa that is like the tail wagging the dog. An increasing number of clients just want to know what they need to do to comply, and say they will look at the benefits as a second step. Whether that is good or bad is a different question, but the good news is that technology made the first step easier. Mike compared Sepa to a TMS upgrade and there is a lot of truth in that. Ten years ago such a step would have been a lot scarier than it is today. It still requires a review of databases to see if your counterparty information is good enough and some testing with the banks, but it is relatively straightforward.
JS, Lloyds If I were a corporate treasurer in the current economic environment, anything that made my current business model feel different to my end-customer would concern me. If it results in any negative customer reaction for example, if a customer might not recognize a payment on their bank statement following a change to collections I am not sure I would be brave enough to risk it right now.
LN, Euromoney Is there any doubt in the industry that the deadline of February 2014 will be met?
MM, Barclays We have the system and infrastructure in place, and we are already actively talking to customers about that date. So even if it moves which we dont expect it is still good to have a discussion now and be ready from an operational perspective with offerings such as a management system to help corporates to facilitate migration. It is an irony that we have been talking about Sepa for years, and it finally arrives in the biggest European economic crisis that you can think of.
LN, Euromoney How can new payment methods such as mobile and internet payments be used by corporates and how should they be regulated?
MC, National Grid Banks are incredibly good at putting together systems and processes that customers want. I do all my payments on my iPhone. At corporate level our payment system is Swift, which is bank agnostic, and we run it in the Cloud, so if our office burns down the team can go to Starbucks across the road and run all our payments.
MV, Wolseley Malcolm snap! Our business continuity plan for when our systems go down is also for the treasury team to meet in Starbucks. For us, what is important is how customers want to interact with us, buy from us, obtain information from us and recommend us to other potential customers its not just about payment systems. The fact that we make their accounts available online or that we can take payments from them or transmit money to them online is only a small part of it. Our business model will change as the customers move to increasingly more sophisticated technology.
MC, National Grid In the US, banking is some way behind Europe; cheque use is still de rigueur. But I recently saw a great example of technology adapting to meet market realities: most retail banks will now accept a scanned image of a cheque on a smartphone for paying in.
MV, Wolseley We scan cheques in from 1,200 branches the scan goes in the lockbox, which then processes the scan. We rely on the post to clear our receipts.
MM, Barclays There are two different areas here. Mobile banking on a phone or tablet computer is just a different channel to the same underlying products a payment from your mobile banking application is still a payment that goes through the clearing systems, requiring bank account details, etc. However, it is also possible to make a payment at the point of sale, or to another person using an app on your phone. We brought out Barclays Pingit about a year ago and have had more than a million downloads of the application: users are actively sending money either to other users or to merchants to pay for goods. It is changing the way consumers buy and interact with their counterparties.
LN, Euromoney As a regulated bank Barclays has to comply with existing regulations. But there are also non-bank companies in this space that are not governed by the same bank regulations. Is this problematic?
MM, Barclays Absolutely. A good example is Kenya, which uses the M-Pesa system where many of the stakeholders are telecoms companies. This requires new thinking, especially about how consumers interact with other counterparties. It raises questions around what currency itself is it might be possible to pay with mobile phone minutes or Facebook money, for example. Banks, companies and regulators have to work together to create an environment that is exciting and efficient, but as well regulated as the banking industry, in the narrow sense, is today.
JS, Lloyds One problem is that no one has thought about the implications of mobile payments in terms of existing regulation. For example, no one has figured how Dodd-Frank might impact dollar flows on a P-to-P basis for someone in the US trying to send dollars to someone in the Middle East. The technology is ahead of the regulators, which in particular have yet to fully address cross-border payments. The danger is that regulators simply respond by introducing ever-more regulation.
MM, Barclays We need to be careful here we are not asking for more regulation!
JS, Lloyds Equally, you cant leave it unregulated though, can you?
MM, Barclays There needs to be an adaptation of existing well-functioning regulation, especially in anti-money-laundering, to the new channels and new providers.
LN, Euromoney How can National Grid make use of mobile payments technology?
MC, National Grid In the UK our customers are the generators, so theres no opportunity. In the US, where we have domestic customers, it is incredibly antiquated: people come in and pay their bills monthly by cheque. We cant persuade them to move to direct debit.
MM, Barclays Sometimes we overestimate the importance of existing payment methods and underestimate the willingness of the consumer to try out new channels. When Germany decided to get rid of the euro cheque it just removed the cheque guarantee, and all of a sudden cheque volumes dropped to zero. It didnt really lead to a major outcry. That lesson could be important when we think about mobile payments dont underestimate the flexibility of the consumer.
LN, Euromoney Regulations such as Basle III have big implications for banks: how will they affect bank-corporate relationships?
MC, National Grid Over the last five years we have lost some banks from our banking group, typically when they have been taken over. Some smaller European banks have withdrawn from our facility. However, our core banking group has not changed. Weve always wanted banks to make a reasonable return because we recognize they are tying up capital. Thats meant weve never been as aggressive on pricing as we could be.
MV, Wolseley Malcolm, how many core banks do you have?
MC, National Grid We now have 29.
MV, Wolseley We are not dissimilar: we have 21, which is down from 35 in 2005. All of our banks now do other business with us. We have been able to force our brokers, who previously didnt lend to us, into our group as a condition for keeping our business. The banks are still willing to lend albeit in smaller size but they have to get something out of it.
MC, National Grid We have worked hard to explain to banks what services, such as cash management, bond issuance, derivatives and FX, are available (which only go to relationship banks and brokers). Our brokers also lend us money we worked hard on that. We have 29 banks and around £3 billion of committed facilities, so it is an average commitment of £100 million each, but some banks commit more because they have more remunerative services; for example our UK cash manager provides us with larger facilities. We try to keep banks on equivalent terms just to make things easier. The banks have to be capable of providing the service we are giving to them: if we do a sterling issue I want a lead bank that will be good at it but I will also happily put another bank that isnt naturally a sterling house on the mandate if they are eager for the role and are part of our group.
MM, Barclays What has changed is that this process is now more transparent. The dialogue about lending commitments and ancillary business is now about allowing banks to earn a return on capital that is above their cost of capital. Corporates are more unlikely to award cash management business to a bank outside the core banking group. But equally banks are now more up-front in asking for a bit of non-capital-intensive business when they make a lending commitment.
MOB, RBS Reciprocity is key. We share information about what we derive from a relationship with our clients. But from the banks perspective you need to be selective about where you chose to do business it has to be about optimal benefit for both sides.
MV, Wolseley Post-crisis, there is far more of a partnership with banks than before. Before, there were definitely some banks that just wanted to do a transaction, take the upfront fees and move on. That seems to have changed: if you are in a long-term partnership, you must have a better understanding of one anothers economics, and what each can provide for the other, because if you dont you will ultimately not have a mutually profitable relationship.