Another year of bank migration?

October 16, 2009
Back to TopCommentsE-mailPrintBookmark and Share

More than a year has passed since the financial crisis prompted many Hoosier businesses to start looking for new bank relationships, and one observer thinks the trend will last for at least another year.

Steve Beck, a longtime Indianapolis banker before jumping into other pursuits, says businesses continue to worry about instability in the banking system, particularly if the banks are tied to institutions that accepted federal TARP money.

So the companies, many with a history of working with only one bank, are looking for a second in order to spread their risk, much like a manufacturer would diversify steel suppliers—just in case.

“It’s going to last awhile,” Beck says. “The business community isn’t sure what the rules of the game are. They aren’t sure the banks know what the rules of the game are.”

After a career spanning Huntington, Old National and other banks, Beck now manages Indiana, Kentucky and Ohio territories for Chicago-based Geneva Capital Group. The investment bank funds commercial real estate development and syndicates the loans to Midwestern banks.

In his discussions with bank executives, Beck finds the movement to diversify bank relationships benefiting mostly smaller banks. Small-bank officials tell Beck they’re so swamped with requests that they’re turning some away.

The businesses believe they will have an easier time developing a personal relationship with lenders in small banks. Sometimes that’s true and sometimes not, he adds, but the businesses seem convinced of it.

Incidentally, the migration stands to cost big and regional banks lots of customers. Many small banks are capable of handling upward of $7 million to $8 million in loans per business—plenty to support the vast majority of companies.

What do you think? Are you seeing the same trend?
 

ADVERTISEMENT

Post a comment to this blog

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT
  1. PJ - Mall operators like Simon, and most developers/ land owners, establish individual legal entities for each property to avoid having a problem location sink the ship, or simply structure the note to exclude anything but the property acting as collateral. Usually both. The big banks that lend are big boys that know the risks and aren't mad at Simon for forking over the deed and walking away.

  2. Do any of the East side residence think that Macy, JC Penny's and the other national tenants would have letft the mall if they were making money?? I have read several post about how Simon neglected the property but it sounds like the Eastsiders stopped shopping at the mall even when it was full with all of the national retailers that you want to come back to the mall. I used to work at the Dick's at Washington Square and I know for a fact it's the worst performing Dick's in the Indianapolis market. You better start shopping there before it closes also.

  3. How can any company that has the cash and other assets be allowed to simply foreclose and not pay the debt? Simon, pay the debt and sell the property yourself. Don't just stiff the bank with the loan and require them to find a buyer.

  4. If you only knew....

  5. The proposal is structured in such a way that a private company (who has competitors in the marketplace) has struck a deal to get "financing" through utility ratepayers via IPL. Competitors to BlueIndy are at disadvantage now. The story isn't "how green can we be" but how creative "financing" through captive ratepayers benefits a company whose proposal should sink or float in the competitive marketplace without customer funding. If it was a great idea there would be financing available. IBJ needs to be doing a story on the utility ratemaking piece of this (which is pretty complicated) but instead it suggests that folks are whining about paying for being green.

ADVERTISEMENT