COMPETITION among banks is reflected in advantageous loans to companies.
photo: File photo
"Trends in banking are similar to other fields of business. Demand for new, modern and modified products and services is still growing," said Silvia Nosálová, VÚB bank spokeswoman.
"Clients are not content with traditional and conservative portfolios of products and services any more," she continued.
In Slovakia, corporate bank products have come a long way since the revolution, when there were almost no private businesses in operation and only one state bank in existence. But as significant progress was made in Slovak banking, companies throughout the country were developing too. At that time banks had perhaps an easier passage in catching up with international standards, partially because of the expertise of foreign investors entering the Slovak financial markets shortly after the revolution.
During this period in Slovakia, the middle and small entrepreneurs, however, had to learn how to establish and develop their businesses as well as become good financial managers, able to choose the most suitable bank products to meet their needs.
Accordingly, say the bankers, Slovak companies, including middle and small enterprises, have since grown in their knowledge about the scale of banking products for corporate clients.
"Interest in using sophisticated products like structured financial treasury products by small and middle businesses is increasing," said Eva Güttlerová, spokeswoman of Slovenská sporiteľňa bank.
Traditional products like current accounts, with payment and credit cards, systems of payments to business partners, and term deposits are, of course, still mostly used, with electronic banking becoming increasingly popular among corporate clients.
Entrepreneurs are also greatly interested in the variety of short or long-term credit deals on offer. As well as using the traditional bank loan, they may also turn to open-ended, or revolving loans, overdraft accounts with agreed limits.
Many middle businesses are also using treasury products to facilitate and bolster their economic standing. The other options are numerous: factoring, leasing, hedging, stock exchange investments and various bank-insurance products all now play a part in corporate product portfolios.
Individual clients also inquire about new schemes to acquire loans or getting the best value for their money in their bank of choice. To meet these needs almost every bank has responded with an individual approach providing each corporate client with its own advisor, who is on hand to give information about suitable products and financial packages.
According to a brief survey among Slovak banks, their most recent innovations currently focus on electronic banking and optional loan products, allowing clients to carry out payments at lower charges, or agreeing better terms for payments made from abroad.
Competition has meant that banks need to attract new clients and keep existing ones by improved and easier access to loan options, such as quicker assessment of business plans, less bureaucracy, less strict requirements for guarantors.
However, the majority of banks stress that the most important factor in choosing a bank by an entrepreneur is still the price, with trust and the individual approach other important factors.
"Corporate clients in Slovakia, as well as abroad, stress mainly the price. Effectiveness of a product and flexibility is also important for a firm.
Last but not least, there is the relationship with the bank advisor - his overall interest in a client and his business," said Nosálová.
"Small and middle entrepreneurs stress mainly the quality of the relationship with a bank. It includes reliable and quality services. The price of products plays an important role in choosing a bank," added Güttlerová.
Roman Začka, PR director of Tatra banka, explained that the majority of Slovak banks belong to multinational bank groups which enable them to use international know-how and the benefits from global trust.
According to Norbert Lazar, the spokesman of OTP bank, clients are interested in complex offers. It means that if a businessman has his company account in a bank he also expects to get a loan as quickly and as easily as possible.
Yet whilst businesses in Slovakia often judge a good bank according to its willingness to offer a loan, some say that banks make claims about their products which in reality are not entirely true.
Banks disagree, adding that if a businessman submits a viable business plan, obtaining a loan is much easier than before.
"In Slovakia, as well as abroad, two basic things are required for getting a loan: a realistic business plan and the ability to document a return on invested money.
"We currently provide loans on excellent terms. They are maximally reachable and we would like to go on with this policy further," emphasised Lazar.
Nosálová is confident that competition among banks is reflected in advantageous loan conditions for companies. "Banks change loan terms, cut interest rates; redundant bureaucracy is disappearing, and the approach to bank guarantees is less conservative," she said.
However, she admits that new entrepreneurs who are starting up in business find access to loans a problem.
In such a case a bank cannot base its decision on any documents supporting the successful history of activities of the applicant.
"Even though many banks claim they have such loan types in their portfolios, real chances of obtaining such loans are not in the majority," she stressed.
Začka thinks that the number of businessmen who come to banks with realistic business plans is growing, however there are still many of them who are not familiar with all the possibilities a bank can provide.
"Many still do not have enough information on what a bank can offer them, or where it can help them.
It often happens that clients are surprised how simple, fast and effective it is to cooperate with a bank," Začka added.
The big retail advertisement campaigns of the majority of banks in Slovakia, however, would suggest that their target market remains the individual.
But the banks are quick to point out that corporate clients are in no way less interesting for them. The "contest" for this business sector is only carried out by different methods.
"It does not mean that an intensity of competition for corporate clients is milder. It may seem so, because in the case of the retail market, the media are used more often and generally; there is more money invested in campaigns for retail clients.
"Addressing corporate clients is more focused, and direct communication channels, like direct marketing or bank extracts, are more frequently used," Nosálová told The Slovak Spectator.
Lazar also maintained that the corporate client approach is different, and is based more on personal contacts through account financial advisors.
"The fight for corporate clients is not that visible because the tools of pro-active advertising are directed more towards retail clients and is therefore less used [in the corporate sector]," concluded Začka.
13. Sep 2004 at 0:00 | Marta Ďurianová