Assess client needs, add value to portfolios

PATHFINDER

Corporate banking, as the name implies, refers to the servicing of financial require-ments of corporate houses.

A relationship manager is the pivot of this department. The role of the Relationship Manager (RM) can be divided into three major areas — assessing the clients’ needs, analysing and facilitating sanction of credit to the client and coordinating internally with various departments of the bank to deliver the banking products to the client.
To start with, a relationship manager needs to know his client very well.

It is this understanding that will generate long-term benefits for both parties involved.  Understanding the client calls for understanding the ownership structure, the business, in terms of products and how they are being sold, the dependencies in terms of suppliers and buyers for the business, and finally the financials — working capital cycle, capital structure, margins, etc.

For this, you need to meet the key people in the company, understand their outlook for the future, and also study in-depth the financials of the client. Assessing the client’s requirements is often simply asking the right questions, and your understanding of his business is key here. The relationship manager also needs to know his own organisation very well to be able to map its strengths to the requirements of the company.

The RM is able to establish a deeper relationship, only if the client looks at him as an advisor and not as a facilitator. At the same time, the RM needs to be aware of the relationship value of the client. He is constantly being pulled in many directions, and he needs to allocate his time depending on this value. The relationship value would not only be the value of the current deals that can happen but also depend on the growth of the company and its financial needs in the future.

The second key area for the RM is to analyse and sanction credit facilities to the corporate house. This will involve coordinating with both the client and credit risk department to have the loan sanctioned. Often, the credit risk department will have queries on the client’s financials and business. The RM needs to understand the queries and  clarifications from the client and convince the credit department of the rationale. The RM would also be recommending what amount of credit to sanction to the client. The RM is also the decision maker for the bank, on pricing of all credit and trade products and services.

An important thing to understand here is that debt is only one of the many products that the bank offers to the client. The bank can serve as a financial intermediary in almost all of the trade transactions that the company does and also facilitate financial risk management and help mitigate business and financial risks to the company. To do this, the RM needs to co-ordinate with various departments within the bank such as transaction banking (trade, finance and cash management systems), treasury (facilitates currency transactions) and advisory divisions (investment banking). The product teams will focus only on the execution of the transactions within their product framework, while the relationship team will focus on the overall credit sanction and have a more macro view of the relationship.

The RM will typically co-ordinate with the credit risk department to sanction a credit line to the client.

He will then co-ordinate with the operations team to ensure smooth documentation and setup of these facilities.

He will then co-ordinate with the product teams to enhance the relationship value of the client. He will also monitor the client’s business, evaluate and implement any change in the nature or quantum of the sanction to the client.

The RM is the face of the bank and speaks on behalf of the bank for all the client’s needs. He is also, in a way, the delivery manager who ensures smooth delivery of all the products and services.

The key skills required in relationship management are people management and project management skills. In a way, the relationship manager needs to be the Jack of all trades and the master of as many as possible.

Banks usually prefer management graduates in these roles, but also sometimes hire internally from other departments of the bank.

The size of the relationships also determines how fast RMs graduate in their career. For example, if you were handling large corporates (say with revenues greater than Rs 1,000 crore) you would have to spend at least 2-3 years doing credit and operations as a junior relationship manager before you get to face the client and manage relationships independently.

If the company size is smaller, the time taken to get an independent client facing role would be less.

Typically, the relationship manager moves from handling credit and operations to handling independent relationships. The next step is to handle an entire portfolio as a team leader .

The growth of the RM is inextricably linked to the growth of his client and at the same time he is accountable to the bank for managing the risk in his portfolio.

It is this balancing act that makes relationship manage-ment in a corporate banking department exciting and fulfiling.

There are really no global certifications available in this area, but locally, practical training and certifications in corporate banking are available.