Banks Accused Of Pressure Tactics

Large companies are increasingly likely to be subject to pressure from commercial banks, according to a survey by the Association for Financial Professionals (AFP). Fifty-six per cent of companies with annual revenues greater than $1 billion reported that a commercial bank denied credit or changed the terms of credit after the company did not award other fee-based business, such as investment banking or strategic advisory services. Furthermore, three out of five large companies reported that the pressure to award additional business has increased over the last year. In August 2002, responding to a congressional inquiry, the Federal Reserve and the Office of the Comptroller of the Currency stated that they had not identified any prohibited tying activity by commercial banks. They also indicated that they are undertaking further review. ‘Our members have consistently expressed a concern about their company’s access to credit being contingent upon the purchase of additional services,’ said AFP’s President and CEO Jim Kaitz. ‘This survey demonstrates the need for further investigation into this matter.’


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