How Main Street Businesses Use Financial Services
Key Survey Findings
April 10, 2013
Methodology
On behalf of the U.S. Chamber of Commerces Center for Capital Markets
Competitiveness (CCMC), FTI Consulting conducted a survey among 219
CFOs and Corporate Treasurers, representing both privately-held and
publicly-traded companies.
The objective of this survey was to understand the financial services needs of
mid-sized and large-sized companies and their use of commercial banking and
other financial services.
As such, respondents were screened to ensure they:
Worked for companies with at least $75 million in annual revenue.
Are very closely involved with at least one significant financial function of
their company.
The survey was conducted online from March 12 April 1, 2013.
Additional follow-up interviews were conducted to glean additional, qualitative
insights.
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Summary
1. Choice & Diversity Are Paramount
95% of Main Street businesses surveyed use 5 or more financial services.
And, they use multiple institutions to meet their financial services needs.
Among Main Street businesses that issue debt, 62% use 5 or more
different institutions and 25% use 10 or more institutions.
2. Choice + Diversity = Flexibility
They use multiple institutions of different sizes to meet their needs.
Among Main Street businesses that issue debt, 84% use global
institutions, 34% use national institutions, and 21% use a regional/local
bank.
As the economy has improved, Main Street businesses are using more
financial vehicles than 2-3 years ago. Specifically, 21% say the number of
financial vehicles they use has increased, while only 6% say they use
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fewer financial vehicles.
Summary
3.
Ineffective Regulations = Reduced Choices
And Increased Costs
More Main Street businesses say Dodd-Frank is reducing choice, rather
than creating more choice.
71% rate Dodd-Frank as negatively affecting their ability to access
services.
79% of those who say Dodd-Frank is hurting their access to financial
services say financial services costs are increasing and causing them to
delay investments, make cuts.
Summary
4.
Main Street Businesses Tend To Favor
Trends & Policies That Preserve Choice
They tend to view the preservation of regional and community banks as a
positive trend affecting their ability to access services.
They tend to view consolidation of banks as a negative trend affecting
their ability to access services.
They tend to view the hypothetical breakup of larger banks as a negative
trend affecting their ability to access services.
Main Street businesses favor trends that preserve choice and diversity
within the system.
Main Street Businesses Use Many
Different Financial Services
% Very Closely Involved With The % Use 5+ % Use 10+
Institutions Institutions
Use Of The Following Services
74%
Cash Management
Obtaining LongTerm Loans
Obtaining ShortTerm Loans
Issuing Debt
71%
68%
52%
50%
Utilizing Derivatives
Equity Issuances
Trade Financing
$
Issuing Securitizations
Issuing Commercial
Paper
45%
24%
21%
15%
6
39%
14%
46%
21%
42%
21%
62%
25%
40%
17%
39%
6%
40%
12%
36%
11%
31%
6%
Percentages displayed are among those Very Closely
involved with their companys use of that service.
All Types of Financial Institutions Are Needed to
Meet Financial Service Needs
Global
Cash Management
National Regional
Local
60%
48%
27%
11%
Obtaining LongTerm Loans
Obtaining ShortTerm Loans
Issuing Debt
66%
43%
27%
6%
61%
50%
28%
9%
84%
34%
18%
3%
Utilizing Derivatives
74%
40%
13%
2%
Equity Issuances
77%
31%
10%
2%
Trade Financing
63%
35%
27%
10%
Issuing Securitizations
87%
33%
9%
0%
Issuing Commercial
Paper
84%
22%
0%
3%
Percentages displayed are among those Very Closely involved with their companys use of that service.
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Main Street Businesses Value
Services, Presence, And Products
How important is it for your company to have a bank that
1- Not At All Important
5-Very Important
Has a wide spectrum of
services
81%
Has a presence in the
region(s) your company
does business
78%
Has a large domestic
footprint
66%
Specializes in specific
products
62%
50%
Has a large global footprint
Percentages displayed are the percentages who rate each factor a 4 or 5 on a 1-5 Importance Scale.
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As the Economy Has Improved, Main Street
Businesses Have Tended to Use More Vehicles &
More Global Banks Rather Than Fewer
Have used more rather than fewer
financial vehicles
Have used Global Financial
Institutions more rather than less
Financial Vehicle Use Change
Use of Global Banks
Has the number of financial vehicles your
company has used increased or decreased
over the past 2-3 years?
Compared to 2-3 years ago, does your
company use global banks more, the same,
less, or we never used them?
21%
21% More
Increased
63% Same
73%
Stayed About The Same
4%
6%
Decreased
13%
Less
Never Used
Main Street Businesses Have Taken Steps to Deal
With Increased Financial Services Costs
Only two and a half years into Dodd-Frank implementation, which of the following actions, if
any, has your company had to take as a result of the increased costs of financial services?
Absorbed the
higher costs
Made cuts in
other areas,
including
personnel
Increased
prices for
customers
Delayed or
cancelled
investments
51%
20%
14%
$
12%
Decreased
or halted
offerings
STOP
9%
Overall, 61% of CFOs have taken an action that negatively impacts consumers,
investment, job creation, or services.
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Voices of Choice: Main Street Businesses
We had been taking on derivatives
in the U.S. that were supporting our
overseas entities. As we dont want
to face increased complexity and
cost imposed by Dodd-Frank, we
are moving the derivatives back to
our overseas entities.
Price
Service
As there is more regulation, banks need to add
overhead to complete their processes. We continue to
shop the market.
Our company competitively bids these services on
a more frequent basis to attempt to curb the passthrough of the [regulatory] administrative burdens.
We are using more global banks now that we have
an affiliate company in Mexico, suppliers in Europe and
Canada.
Weve diversified banks, local and global for different uses
as the company has broadened its activity: derivatives,
corporate short-term debt, and project finance.
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New Regulations Are Hurting Their Business And
Borrowing, And Arent Increasing Choice Or Confidence
Impact of new
regulations
Im not certain that our legislators in
Washington understand that banks
need to earn decent ROEs for their
shareholders, with their shareholders
being 401k plans, pension plans, etc. In
the end, the American public suffers.
Creating More Choices 11%
Increasing Confidence in Business
Practices & Health of Financial Institutions 29%
Reducing My Company's Access to Capital 32%
Reducing the Choice of Products & Services 33%
Increasing transparency
37%
Increasing Borrowing Costs & Complexity
Making Doing Business More Difficult
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64%
68%
Main Street Businesses See Dodd-Frank As A Big
Trend Driving Increases in Financial Services Costs
61 % say that the increased financial services costs have
forced them to delay investment or make cuts.
Of the 61%, four out of five said that Dodd-Frank has negatively
impacted his companys access to services.
Of the 61%, about 70% say that breaking up the larger banks would
negatively impact his companys access to services.
Increased margin requirements, capital requirements,
and regulatory compliance costs are the key cost
drivers. We are constantly looking at out of the box
ideas to reduce cost.
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APPENDIX
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Sample Summary
Number of Employees
Public / Private
Is your company...
1 99
100 - 499
500 - 999
1,000 4,999
5,000+
Publicly-held
Privately-held
58%
3% 14% 12% 37% 34%
42%
Overseas Region of Operation
Annual Revenue
47% Outside North America
And, what is your companys annual revenue?
5% 16% 16% 63%
<$100M
$100-249M
$249-499M
$500M+
Europe
Asia/Pacific
Africa
S. America
Central America/
41% 40% 18% 27%19% Caribbean
Note - Operations outside N America
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