9 min

Banks – They’re Apples and Oranges

The old slogan that all banks are the same used to be accurate, but it is no longer the case. The banks are currently competing in a low growth, high-compliance environment which is leading to a divergence between banks – one area that this difference is significantly noticeable is in their appetite toward specific industries.

How Different?

Would you be surprised if I said that, on behalf of a customer, Balanz recently fielded the risk appetite from 9 financiers for a particular industry, and the responses ranged from a flat “not interested” to being willing to fund up to 70% of the project value.

Yes, that different.

What’s Driving the Change?

The scope provided to the bank was simple: –

  • Wealthy individual with strong personal cashflow
  • Seeking to construct a childcare centre
  • Long term lease to a proven operator would be in place prior to the start of construction

Interestingly, one banker advised that his bank used to be aggressive for this type of loan but are now “overweight” in this sector and hence no longer interested. He provided a story of how he had an existing customer who had completed 3 similar projects successfully but the bank was not interested in the fourth project – forcing their customer to either let the opportunity pass or find a new financier. The customer had never missed a beat, but the decision had nothing to do with the customer per se, rather it was entirely industry-related.

The disappointing fact is that this is not an uncommon occurrence. If the regulator feels a financier has an unacceptable level of risk to an industry then the financier must take actions to slow the growth or even reduce their portfolio.

How to Sort the Apples from Oranges?

So, these days banks are certainly not apples and apples. This means that knowing each bank’s current appetite toward specific industries is critical for anyone seeking finance. Without the right industry knowledge or guidance, a customer can find themselves in a precarious position and may even miss commercial opportunities due to funding difficulties.

At Balanz, we work hard to understand the ever-changing banking landscape– to know which banks are apples and which are orangeswhen it comes to funding for specific industries. And we use this knowledge to support our customers by guiding them to the best financing arrangement for their individual needs. The right information, to the right bank, at the right time will deliver the right results – that’s the Balanz way.

Need guidance with your business finance? Balanz can help.
Contact Stephen Corbett on stephen.corbett@balanz.com.au or 0428 838 426

Balanz – Your Partner in Business Finance

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