Related News

Top takeaways from GTR Mena 2021

International law firm makes further foray into Africa

Dentons names Singapore energy and projects partner

Task force formed to help lawyers fight corruption

White & Case launches Australia practice

Communication between banks and the treasurers and boards of their clients must improve in the face of increasing regulation.

Speakers at the Association of Corporate Treasurers (ACT)’s annual conference in Liverpool told the audience and GTR that in some cases, those at the top tables of companies lack awareness as to the effect increased financial regulation has on companies, particularly on their ability to secure affordable credit lines.

Issues such as Basel III and Dodd Frank are expected to impose massive changes on the lending market, with banks anticipating a squeeze on their liquidity. However, the complexity of such issues can often result in opacity along the communicative channels.

Speakers encouraged treasurers – who, due to their risk management responsibilities, have become much more prominent on the trade landscape since 2008 – to involve themselves more fully in boardroom discussions and to learn how to communicate the details of such regulatory issues simply.

Bob Williams, regional financial director at Barratt Developments and former president of the ACT, encouraged delegates to apply the “30 second elevator rule” – if an issue can’t be explained in such a situation, you need to get back to the drawing board.

Williams went on to say that treasurers should recognise that factors such as the tightening of financial covenants are a direct result of burdensome legislation and to prepare for that accordingly.

He told GTR that he’s confident that any “good” company will be fully aware of the possible implications and will have strategised accordingly. But there are many more who have made no effort to educate themselves.

However, there is also a requirement for banks to be more open with corporates about their own expectations. One senior banker told GTR at the event that there is a fear among his colleagues to even mention the words “Basel III” in front of existing or perspective clients. Clients, he said, do not properly understand the implications and bankers are loath to come to the table with negative news.

It’s also the case that companies often “don’t want to know” about the regulatory issues facing banks and prefer for banks to deal with it themselves. However, warned GTR’s source, corporate and financial institutions alike will suffer if there isn’t open and frank discussions about the potential fallout of Basel III.