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Lenders nibble at big banks

FOR most businesses in WA, banking is conducted through the State’s big five – BankWest and the four national banks, ANZ, Commonwealth, National and Westpac.

However, there is a handful of interstate and overseas banks in Perth offering an alternative to the big five.

There is also a range of non-bank financiers providing specialist products to the business sector, such as leasing and debtor finance (the focus of next week’s article).

And, to help businesses make sense of these competing options, there is a growing number of finance brokers and originators.

Interstate and overseas banks such as St George, BNZA, Citibank and HSBC generally target specific market segments or promote specific products in order to differentiate themselves from the big five.

Sydney-based St George is the fifth biggest bank in Australia but has a modest presence in Perth, with 11 managers in corporate and business banking.

“We are trying to create a position that is a little different,” St George State manager, corporate and business, Martin Barrett said.

A major focus for St George has been property lending for construction, land development and investment.

“We have a very strong property team with a lot of expertise,” Mr Barrett said. “We look at property transactions a little more flexibly.”

For instance, St George is willing to lend at higher loan-to-valuation ratios than other banks. To manage its risk, it tends to manage the construction phase closer than other banks.

St George also has a Perth-based credit manager who can approve loans up to $5 million, without having to refer to head office.

Mr Barrett claimed St George was now among the top three banks in property lending in WA.

He said the bank offered a full suite of business banking products, including equipment finance and cash flow lending through its ownership of Scottish Pacific Business Finance.

BNZA targets large private companies and mid-sized public companies with a minimum lending size of $1 million.

Senior manager Daniel Donovan, who heads a team of 12 managers, characterised BNZA as a relationship bank.

He said most of his managers had been dealing with the same clients for up to eight years, in contrast to the high turnover of managers at other banks.

He said BNZA did not require all lending to be 100 per cent secured by property.

“We also lend against stock, debtors and contracts,” Mr Donovan said.

BNZA was formerly the Australian arm of Bank of New Zealand, which was taken over by National Australia Bank. Instead of being fully integrated, BNZA has been retained as a separate division of NAB.

“We were left alone because our clients demanded it,” Mr Donovan said.

HSBC and Citibank are two of the world’s biggest banking groups and both have focused niche operations in WA.

HSBC’s business services fall into three categories: corporate banking for larger ASX companies and multi-nationals; ‘middle market’ banking for companies with turnover of $5 million-plus; and its Hexagon electronic banking pack-age.

HSBC State manager Geoff Farr said HSBC targeted companies involved in trade finance, where its extensive global net-work provided a competitive edge.

Engineering and mining services were two areas where HSBC had established a substantial presence, he said.

Citibank is even more focused than other banks, with a single product for both the business sector and investors.

It sells a revolving line-of-credit product that can be secured by residential, commercial or industrial property.

Senior commercial lending manager Brian Watson said Citibank’s business clients typically had a transactional account with one of the major banks.

Clients use Internet banking to transfer funds between their accounts, thereby benefiting from the low fees and low interest rates on Citibank’s property secured facility.

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