Loosening up banking relationships
As senior bankers devise their new strategy for dealing profitably with resurgent Japanese corporations, they are struggling to define a new model of relationship banking.
They know what it shouldn’t be: what it was in the past. Formerly, the main bank to a company was wedded to it. If the company hit problems and its second- or third-tier relationship banks stepped back, the main bank kept lending to it to the bitter end. It was almost to the bitter end of the entire Japanese banking system.
Mizuho has close relationships with 70% of listed companies in Japan and accounts itself the main bank to 40% of those customers, according to Hiroshi Saito, CEO of Mizuho Corporate Bank. Among all those close corporate customers – nearly one-third of all listed companies in the country – no more than a handful still have balance sheet problems. The overwhelming majority are good credits and potentially good customers. That’s the good news. The question is: what should be the basis of a new relationship between bank and corporate customer?
Saito knows that corporates want the freedom to deal with more suppliers of wholesale financial services. They don’t want to be tied to too close a relationship: neither do the banks themselves.