What has made the banks be so dominant at the negotiating table?
At renewal time, banks bargain from strength. When they sit across from their corporate counterparts, they have been dealt face cards. Banks enjoy structural advantages that tilt the negotiating table heavily in their favour. For starters, bank fee negotiations aren’t straightforward. Companies pay a large number of bank fees. Typical banking renewal agreements cover credit facility pricing, operating line fees, current account service charges, cash management fees, interest compensation arrangements, and credit/debit card discounts. When it comes time to negotiate banking costs, the sheer number of costs that need to be dealt with is daunting. Second, banks are shielded from pricing pressures that are commonplace in other supplier relationships. Companies that tender their banking relationship are the exception, not the rule. When companies do tender, they seldom include target pricing – an accepted practice in most other contract reviews. With little threat of nose-to-nose competitio
