The Role of Banks in a Corporate Crisis

Banks have a very special significance in a corporate crisis, because they are traditionally providing the major part of investments. Therefore, they are vital for companies struck by a crisis.

However, banks are more than mere investors: In a crisis, banks should critically evaluate sanitation concepts. Additionally, banks should assess if a concept is doable and discover the concepts weaknesses.

The new Oliver Wyman study „Part of the Solution or Part of the Problem? – Role of Banks in a Corporate Crisis“ questions if banks can fulfill these functions. The study also evaluates if credit institutions can live up to their expectations. However, it must not be neglected that the environment of banks has changed massively in recent years. Here are some of the results:

  • Roughly two thirds of money lenders see themselves as strategic partners in a crisis. Many companies share this view. However, about 22 percent of the surveyed companies think banks and other money lenders are a constant risk.
  • Banks are currently in a very difficult situation. Despite stronger regulations like Basel III and a decreasing demand, banks cannot react with higher interest rates and changed conditions due to the heavy competition.
  • An engagement at companies with a high potential for a crisis can be worthwhile, if the bank can help beyond investments with choosing the right financing structure, or with providing valuable knowledge about the situation.


The possible roles of banks and other lenders in a corporate crisis

63 percent of the questioned companies don’t think that banks or other lenders are definitely a part of the problem or a part of the solution. The role of banks has a bigger complexity.


The Role of Banks in a Corporate Crisis