JP Morgan Retains Pole Position with Major US Corporates

Despite fallout from the global financial crisis and pressure to comply with new Basel III capital rules, the top echelon of US large corporate banks market have remained intact over the past several years, reports Greenwich Associates.

The consultancy firm says that the market continues to show a commanding lead for JP Morgan, used for corporate banking by 86% of large US companies. Close behind is Bank of America Merrill Lynch (BofA Merrill), used by 82% of large US companies, followed by Wells Fargo at 72%, Citi at 60% and Barclays at 40%.

Greenwich notes that with new capital rules forcing major banks to be judicious in deploying balance sheets for clients, large US companies are looking to secure sources of reliable credit by turning to alternative lenders and often making credit provision a prerequisite when awarding capital markets, investment banking and other important mandates.

Although the picture has been largely unchanged at the top of the market, the competitive landscape is being altered by changes in bank strategies and business practices resulting from the new capital rules. In many business lines, banks are targeting capital and other resources at a shrinking number of clients they deem as having the best profit potential.

“Banks are focusing on accounts in which they are the lead provider, or at least a very important relationship, and scaling back commitments or even shedding relationships with companies where they serve as tertiary providers,” said Greenwich Associates consultant, Andrew Grant.

“The message to companies is that whether your goal is to secure the best cash management service or to leverage the maximum amount of credit provision from your cash management mandates, it is important to be perceived as an important client to the bank in question.”

For US companies that do not count themselves among their banks’ most important clients, alternative sources of credit might be required, according to the firm. “Over the past five years a number of credit providers outside the major US banks have expanded their footprints among large US corporates, who are increasingly open to forming new banking relationships as a means of securing credit lines,” says Greenwich Associates consultant John Colon.

“This includes Canadian banks, Asian banks, one or two European banks, several leading investment banks and some of the larger, regional, US banks.”

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