The Credit Crisis
I was recently speaking to the property people in four of our major banks. They each, in their own way, told me that their bank had lost its appetite for risk, lending has slowed appreciably, bank portfolios are being re-weighted out of property exposure, and good clients do not automatically get preference over new loans, or in fact, a good hearing. Sound familiar?
Banks credit and risk analysis staff are now the people to convince whether a loan to a well managed, profitable and forward looking storage business is a good investment and partnership to have. The discussion regarding higher borrower equity, lower loan-to-value (LVR) ratios and a less healthy interest rate do not make the rolling over of a debt or it’s renegotiation and repackaging as “easy” an experience as it was for customers up until the GFC hit.
The conversations could have happened in any capital city, with any of the major lending institutions. The freeing-up of capital through 2010 should slowly loosen the purse strings and freshen the risk perspective, but in the meantime, you need good and established relationships, perseverance and stamina dealing with the often new bankers you have to deal with, and deep pockets. And you also need a very good valuer who provides an excellent, rational report with trading history, operational and management data (via StorMan of course) that gives comfort to your bank. And one who can act as an advocate on your behalf via that report, and in conversation across your banker’s desk if required.