Banking in today’s environment is more complex than at any other time in history. The pandemic has changed everything, and it will undeniably affect middle market and corporate growth, as well as M&A activity. For example, the Paycheck Protection Program (PPP) and Main Street Lending Program (MSLP) were launched as part of the Federal response to COVID-19. Santander Bank has provided PPP loans to more than 12,000 business customers and is an active participant in MSLP.
There are more than 6,000 middle market companies in New Jersey. While the industries, services, products and solutions they provide can be vastly different, each company needs a stable and strong banking partner who truly understands its business model and goals, has a deep understanding of the local economy, headwinds and tailwinds, and can provide the customized solutions that it needs to succeed in these uncertain times.
With more than 50 commercial banks operating in the greater New Jersey region, competition in the market is strong. Middle market companies have their choice of banks, and while no one – including the banks – has all the answers regarding the current economic conditions, strong financial institutions can help pave the way for companies to get back in business and invest in long-term plans that will enable them to succeed in the “new normal.”
In my 40-year career as a banker, the global capital markets have continually evolved and been disrupted by major events such as the 9/11 terrorist attacks and the financial crisis in 2008. Through each of these unique situations, I have come to learn that one key principle never changes: The foundation for the banker-client relationship must be built on trust. There’s undoubtedly a broad array of factors to consider when evaluating a banking partner and choosing the right financial institution should not be taken lightly. Identifying a partner that’s stable, active and has a strong local presence in your operating markets is the cornerstone, but over the long term the relationship must meet several more criteria to serve your needs.
First impressions are important. When evaluating a banking partner, every business should thoughtfully consider if the firm can consistently provide sound advice, insight and guidance that serve their best interests – now and throughout their business’s lifecycle. Ask yourself, are they able to serve your needs locally, domestically and abroad? Can they provide access to the capital and real-time local and global payment, liquidity and modern treasury management solutions you need? Can they deliver in times of crisis?
For companies with international operations, there are several critical questions to consider. Latin America (LATAM) can be particularly interesting to U.S. companies given the geographic proximity and scale of some of its larger markets such as Brazil and Mexico. However, there are inherent complexities that come with cross-border operations in LATAM. For example, LATAM currency volatility can be high – and currency movements can significantly impact costs in U.S. dollars. Can your bank offer solutions to manage and leverage currency fluctuations?
And there are other issues to consider. Have you determined how your needs will be financed? In many cases, these needs may need to be executed locally and in the local currency. How will you manage the flow of funds from the local currency to USD efficiently? What are the tax and repatriation implications? Does operating internationally as a way to strategically streamline distribution, reduce manufacturing and labor costs and grow revenues make sense?
Partnering with a bank that directly operates in the markets where you seek proven, trusted solutions to these questions is a distinct advantage to you. For a real-life example, one doesn’t need to look any further than a client relationship we are fortunate to have here in New Jersey. Specifically, Santander supported a private business that provides technology-led, business process outsourcing to businesses and governments worldwide. Our local relationship led to a need to support the company’s operations in Brazil – a challenging market for U.S. corporates. Our knowledge of the Brazilian economy, extensive presence in the country, and local insights proved to be invaluable during a transformational time for the business. We were able to help our client every step of the way in supporting their offshore strategic priorities and help them achieve their goals.
Another relevant example is a financing that we recently completed for a manufacturer of energy industry products to help further the company’s growth strategy domestically and abroad. The company cited our strong network in the U.S., LATAM, the U.K, and Europe as well as deep expertise in renewable energy financing as key differentiators. Our ability to work with the business to arrange the right services and solutions, which aligned with their current near-term needs, built the trust that was required to support their longer-term plans abroad.
I’m fortunate to still be directly involved in providing access to financial solutions to so many companies in this region. These businesses are the lifeblood of the economy, providing jobs, products and services to the people of New Jersey who need them most. I value the lasting relationships I have developed over the years. Each one has been built on reciprocal respect and enhanced by a deep understanding of the company’s needs on both local and global levels.
So, while much has recently changed in the world and in financial services, I firmly believe that every strong relationship is built on trust – especially in an unpredictable economy such as the one we’re currently navigating. I’m privileged to be part of an organization with a 160-year history that has seen a lot and believes in this philosophy and I’m honored to continue supporting companies in pursuit of their long-term goals.
David Swoyer is executive vice president, Middle Market Banking at Santander Bank.