Top Companies Running Stress Tests On Their Banks

Companies are becoming choosier with their lenders, putting them through rigorous tests and analysing their financial health to pick out business partners, Reuters reported. They are reviewing their bank counterparties, partly in response to worries about the euro zone crisis and its effect on lenders, and because of stricter financial regulations. Gavin Jones, vice-president in the treasury of Netherlands-based Ahold, told the annual conference of the Association of Corporate Treasurers the retailer had examined the banks that it presently deals with. Ahold had asked "everything from how they perform against published financial targets, did they take any money from the European Central Bank (and its cheap financing programme) -- quite a detailed analysis of their financial position", he said. Bigger firms, which provide business for banks through big loans, payment systems, foreign exchange transactions or derivatives, can be pickier, though smaller firms may struggle to secure cash. Philip Learoyd, head of funding and treasury operations at SABMiller, said the euro zone crisis had prompted the firm to compile a more diversified group of bank counterparties. He added the brewer was undertaking a formal review of its "entire approach to bank counterparties". The 2008 collapse of U.S. investment bank Lehman Brothers led to worries other banks could fail, and the euro zone crisis -- which has battered European lenders for two years -- is doing little to allay those concerns. Banks also irked many companies, including some of their best clients, when they pulled out of loans and started cutting credit lines at the height of the financial crisis. Read more.