Banking on Banks
- blog31 May 2020
Banking On Banks was a well-received webinar organized to help businesses prepare for making the best of the initiatives announced by the Central Bank of UAE to ease the liquidity crisis. It was useful to any business in the world that wants to solicit support from their bankers during and after the crisis.
Vikram Venkatraman presented an extremely useful talk that covered the current, as well as future scenarios. He cautioned that it was a deferral program till the end of the year, and after that period banks will be as sharp as ever. He emphasised on the need for businessmen to look beyond the crisis and use the current situation to put their house in order.
He cited the story of two hunters being chased by a bear, and where the race was not to outrun the bear, but to outrun the colleague whom the bear will get first. Comparing it to the current situation, he said banks have very little to hand out, and therefore you need to prepare better than your competitor to get a share before the banks run out of money.
His opinion was that banks will also reassess their assets to shed portfolios that they feel may pose a higher risk. Businesses must do a self-assessment and present themselves in a favourable light, to stay in their good books. Toplines are collapsing and liquidity is thinning, and bank’s provisions are skyrocketing. In view of these factors, banks are going to be over-cautious. It will help businesses to anticipate the change in mood, and act accordingly.
To look good to the bank, the businesses must go back to the basics to ensure an attractive balance sheet, project good governance, have business continuity plans, and reflect transparency.
He proposed a two-phase approach to make the most of the opportunities.
- Start thinking beyond the post-deferral period
- Conduct a stress-test on your business
- Accept the new normal, and work backwards on a plan
- Prepare a restructuring plan, if the situation warrants it
- Use the time to de-leverage, declare hidden truths, and gain stakeholder support
In Phase 2, he encouraged participants to script their own future by creating a separate team to plan the future, to reassess their home markets, and explore new markets and business models.
Citing a McKinsey study, he recommended businesses to analyse the extent of business-model disruption vis-a-vis depth and length of industry demand disruption applicable to their line of business. The McKinsey model would then guide you on the road-map to recovery in the post-CoVid world. Article link.
Vikram answered a few pertinent questions from the audience and shared his contact details for queries arising from his talk.
It was a great learning opportunity for members and their guests. CorporateConnections major benefit is the opportunity for learning and development and events like these help us achieve this goal.
The speaker, Vikram Venkatraman is the Managing Director of VIANTA Advisors. He specializes in working with SMEs in advising them on banking strategy and helps them raise financing from banks. Vikram was the Head of Mashreq Bank Business Banking, and prior that has held senior positions in Dubai Bank, and ABN Amro.