04 Sep 2007


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Alliance & Leicester Commercial Bank targets mid-tier retailers


Finance

Source : Alliance & Leicester Commercial Bank
Alliance & Leicester Commercial Bank is targeting the mid-tier retail sector as it rolls out its major new relationship banking initiative.

A market leader in cash handling – dealing with around one in every five pounds taken by UK retailers – the bank is now strengthening its involvement with the sector by developing long-term reciprocal banking relationships, including offering full banking services and lending.

“We have been market leaders in cash handling for the retail sector since purchasing Girobank in 1990,” says Karen Woods, Director of Relationship Banking at Alliance & Leicester Commercial Bank, “so many of our relationships with retailers go back nearly 40 years. Yet this is the first time we have created a sustained initiative to target retailers for full banking services and relationship banking.”

Indeed, the initiative has both a service and product element. In terms of service, the bank is introducing regional corporate relationship managers to cover the retail sector across the UK.

“We have a dedicated team of 26 relationship managers and plan to more than double this in the next 18 months,” says Woods. “Relationship managers are regionally focused and located, and retail specialists. It is certainly not the intention to run banking relationships from head office – something I think will be very important for the mid-tier retailers, which are often regionally rather than nationally focused.”

On the product side the bank has introduced a suite of deposit accounts and has created a treasury department for clients – headed by Mike Bligh, who joined the bank from Barclays Capital in October 2006.

“Building on our existing Treasury expertise and expanding to introduce risk based services is important for the bank,” says Woods. “We realise that there is a growing appetite for risk hedging from mid-tier retail operations. The aim is to review and develop tailored risk management solutions for our clients – something we expect will be a first for many of our target clients who don’t make it onto the radar screen for such services from their current banks.”

Yet the core of the initiative will be the offering of a range of lending products, including term loans, syndicated loans, short-term working capital lending, long term development finance, and project and asset-backed facilities.

“Lending is a crucial element of the initiative,” says Woods. “Many mid-tier retailers are unaware of the structured lending products that are on offer – for instance to flexibly finance a fleet of commercial vehicles or simply the roll-out of new outlets.”

Other products and services include duty deferment bonds, to spread the impact of import duties on the client’s buying operations and a flat fee international payments service.

According to the bank, the initiative is likely to be well received among mid-tier retailers, where internal research has uncovered a jaded view of many existing banking relationships with the big clearing banks.

“We are simply building on our strong credibility as a cash handler,” says Woods, “yet we are also very aware of the fact many mid-tier retailers are under-served by their current banking arrangements. Certainly that’s what many are telling us.”

However, the bank is also keenly aware that its best entrée is via its renowned cash handling services, which include Post Office depositing – especially as this is where the big four banks are weak.

“We’ve been with ALCB for over 8 years - mostly using them for cash handling although recently we’ve started to use other services like foreign exchange, finance leases and corporate lending, “ says David Houston, Group Finance Director at Edinburgh Woollen Mill. “Overall the service we get exceeds our expectations, which is largely down to our relationship manager. Certainly, our recent take up of other products has been due to some effective cross selling by him, and includes derivatives, finance leases and operating leases.”

Others concur. “Our association with Alliance & Leicester goes way back to Girobank days,” says Hugh Kennedy, Managing Director at Curley’s Supermarket in Northern Ireland. “We use them for cash handling, current account and term loans. And when we have surplus deposits we sometimes place them with ALCB. I would describe the service as very good and I’m happy with it. Knowing who our main contacts are really helps. We feel that Alliance & Leicester Commercial Bank is better at knowing its customer than other banks.”

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