• Financial Risk
  • Greenwich Associates LLC
  • Financial Services
  • Covid-19
  • Coronavirus
March 19, 2020

Managing Through Crises - Lessons and Best Practices

What to Anticipate and 5 Actions to Take

We have been studying responses to crises over time and the actions of those who have successfullynavigated these situations.


The COVID-19 virus is incredibly sad and frightening on a personal level, yet there are important businesslessons to keep in mind when managing what will likely be difficult times ahead for companies and theirfinancial service providers.


Banks will be under attack from all angles: historic low interest rates, softening loan demand, lower share ofwallet as companies diversify bank groups, and increased capital to support company downgrades in riskratings.


Managing through crises is where great companies—and their advisors—can separate themselves withcompelling insights and advice to tackle the most pressing issues.


What to Anticipate Next in Banking

  • Companies will focus on de-risking - often resulting in more banking providers
    • Supply chain risk (e.g. away from sole sourcing in China)
    • Financial risk
    • Access to capital risk
  • Business executives will delay capex decisions, fortify access to capital and dam up cash
    • Lower loan growth from delays in capex decisions may be partially offset by short-term tapping of lines of credit to ensure access to capital
  • Company risk ratings will decline 
    • Despite fiscal and monetary relief efforts by governments, global economic slowdowns will cause downgrades of companies, especially in certain sectors impacting bank capital requirements
  • Interest rates will remain lower for longer than expected
  • Meaningful market share gains are available for banks… if they are well capitalized, externally focused on the right opportunities - and bold
    • Financial service providers with the balance sheet and stomach to support great companies with capital and advice have opportunities to pick up disproportionate market share
    • This requires smart prospect targeting and client-need-based selling

During crises, it is easy to get it wrong, with severe consequences. At the same time, business executives are looking for partners they can trust to help them navigate difficult situations and provide the capital as well asother solutions to help them through.