Banks are professional negotiators. Corporates, by and large, are not. This asymmetry — between an institution that prices, structures, and renegotiates as its core business and a counterpart that does so once every several years, often reactively — is one of the most consistently overlooked sources of cost in corporate finance.
It is not a problem of poor relationships. The relationships are usually excellent. It is a problem of structural under-management of a major recurring expense.
The cost is recurring, not one-time
Banking cost is rarely a single number on a P&L. It is spread across FX spreads, payment fees, account maintenance, credit facility commitment fees, ancillary services, and the implicit cost of cash held in non-yielding accounts. The total — across a mid-sized international corporate — frequently exceeds what the finance team assumes when asked.
The cost compounds for a simple reason: pricing set in one environment tends to remain in place even after the business, the rate environment, or the banking landscape changes. Pricing transparency is not a default property of banking relationships. It has to be created.
Where the asymmetry shows up
FX spreads
The single largest source of avoidable cost in most banking relationships. Spreads agreed when the relationship was established, or when volumes were lower, are rarely revisited. The market has moved. The pricing has not.
Credit facility pricing
Commitment fees, margin grids, and covenant packages are often set on terms that reflect the business's risk profile at a previous point in time. As businesses mature, this pricing should evolve — and frequently does not.
Cash management services
Account fees, transaction fees, and value-dating conventions accumulate quietly. Reviewed on an item-by-item basis, each looks small. Reviewed in aggregate, they often represent the second-largest source of avoidable cost.
Concentration
Single-bank dependency — the most expensive form of relationship management — is not a function of strategy. It is a function of inertia.
The corporate counter
The asymmetry can be addressed. It requires three things.
- Visibility. A consolidated view of the cost being paid across all banking counterparts, by service. Most corporates cannot produce this in less than several days of work. That is the first signal.
- Benchmarks. Independent reference points for pricing across FX, fees, and credit. Without benchmarks, negotiation reduces to "is this competitive?" — a question the bank is uniquely qualified to answer in its own favor.
- A structured negotiation cadence. Banking pricing is a relationship-cycle conversation, not a one-time procurement event. Corporates that negotiate annually, with structure, build leverage that compounds over time.
The banking relationship is one of the few major financial expenses where the counterpart, by structure, knows more about the price than the buyer does.
The PE precedent
This is one of the areas where private equity portfolio companies have moved well ahead of standalone corporates. PE operating teams treat banking as a value creation lever from day one of ownership. They expect a banking review, a benchmarking exercise, and a renegotiation as part of the financial discipline introduced post-acquisition. The savings are reliable enough to be modeled into the value creation plan.
There is no structural reason a standalone corporate cannot adopt the same discipline. The barrier is usually internal capacity, not opportunity.
The asymmetry is also the opportunity
Banking relationships are too important to leave unmanaged, and too technical to manage casually. The corporates that build a structured, independent banking strategy — with visibility, benchmarks, and cadence — convert one of finance's largest silent costs into a durable source of margin. The corporates that do not, continue to pay for the privilege of not having looked.
This insight reflects general analysis and observations from Firma Advisory's work in treasury, banking, and cross-border financial advisory. It does not constitute investment advice, financial advice, or a recommendation in respect of any specific security, transaction, or financial decision. For analysis specific to your organization, contact us at contact@firmaadvisory.com.