Selecting a global banking group for commercial needs
Thursday, 1 October 2020
Choosing the right bank is a vital component of successfully operating a global company.
It involves more than simply opening an account, however; ideally, you're forming a partnership with the bank that will help your business succeed globally. With so many commercial banking options available, finding the most suitable choice can be daunting to say the least. As you compare different banks, there are several factors to consider which may help you to narrow the field.
Begin by assessing your business's needs
Before you choose a bank, consider the kinds of tasks you need to accomplish to open or expand your business in another country.
For instance, if you are entering a foreign market for the first time, can your bank open an account and line of credit there? And what about the employees who will launch the business? Will they have difficulty opening accounts and getting credit cards if they are new residents or will your bank be able to assist them?
Laerte Barros, head of international commercial banking for BBVA, says these are common questions for middle market companies in the United States looking to expand abroad and foreign middle market businesses considering opening a U.S. location.
Being a subsidiary of a multinational bank with a presence in several countries gives BBVA a competitive edge when it comes to supporting middle market businesses expanding internationally, he says. "Because BBVA has commercial banking capabilities in 17 countries, we can provide local financial products and services in those markets, which not many U.S.-based banks can do for middle market companies."
For instance, if a middle market company in the United States wants to explore opening a facility in the United Kingdom or Turkey, BBVA can organize a video conference with the client and BBVA Group bankers overseas to talk through the specifics of providing banking services there.
Conversely, BBVA Group bankers in Spain or in Chile can connect businesses looking to expand into the United States with BBVA commercial bankers. "We have internal processes that can help streamline the financial support to global companies," he says.
Barros offered these tips to middle market businesses looking to grow abroad:
- Make sure the bank that supports you in the United States has established capabilities in the country you are targeting. Check to see if the banking products that you use now and may need in the future are available in your target country. For example, look for banks that provide a strong treasury management online platform so you can efficiently manage your cash flow from everywhere in the globe. If you anticipate needing financing for your business at some point, does the bank offer financing options that cater to your specific industry? Since you will have a new company overseas with no credit history, would the bank be comfortable to extending credit based on the corporate guaranty of the U.S. parent? Answering these questions can give you a better understanding of what qualities are most desirable in a bank.
- Ask if the bank has advisory services that can provide macroeconomic information, local market knowledge, and a primer for doing business in that area. Local expertise can be invaluable when you are entering a new market, says Barros.
- Check to see if the bank can connect you with local legal and tax advisors and assist your employees with everything from getting car and home loans to obtaining a credit card. "In the U.S, we often help expat employees of our international clients with personal banking needs," he says.
Gauge the bank's financial health and reputation
Measuring the strength of a commercial bank is a significant step in the selection process. First, consider the bank's assets, which are an indicator of its size and position in the marketplace and the quality of its capital, says Barros. It's also important to look beyond the numbers and factor in the bank's reputation and overall credibility.
Having a partner that has a strong reputation in the market and can support the business' international goals with local and global expertise is critical, Barros said. For instance, how lengthy is the bank's history? Is it viewed as an industry leader or a technological innovator?
The more thoroughly you research a prospective bank's background, the easier it becomes to evaluate its strengths and potential weaknesses.
Consider the quality of the relationship
When you're entrusting your business' assets and financial management to a commercial bank, the last thing you want is an impersonal experience. Beyond products and services, your bank should also be able to offer one-on-one interactions and tailored advice that you can use to guide your business decisions.
Good communication and transparency are essential to a solid working relationship. You should feel comfortable asking questions and responses should be forthcoming in a timely manner, says Barros. While you may not need to know every person at the bank on a first-name basis, you should be able to establish personal connections with key people who are charged with managing your relationship. It is also important that you are aware that there is a large (global) team supporting you behind the scenes.
Keep an eye on the future
Choosing a commercial bank for your global company isn't a decision to be made lightly. When comparing banks, remember to look beyond the present moment. As your business continues to evolve and grow, your banking needs may change. A banking relationship that allows room for both flexibility and adaptability is more likely to prove beneficial over the long-term.
The content provided is for informational purposes only. Neither BBVA USA, nor any of its affiliates, is providing legal, tax, or investment advice. You should consult your legal, tax, or financial consultant about your personal situation. Opinions expressed are those of the author(s) and do not necessarily represent the opinions of BBVA USA or any of its affiliates. All accounts and credit are subject to approval, including credit approval. BBVA and BBVA Compass are trade names of BBVA USA, a member of the BBVA Group. BBVA USA is a Member FDIC.
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