East & Partners

Bank Market Share Changing at the Top End of Town

(Sydney – 4th August 2003) Changes in market share performance among Australia’s leading banks are accelerating in the market’s Top 500 corporates and institutions, according to East & Partners’ "Corporate Banking Account Penetration" research.

The latest six monthly results show that banks’ relationship share positioning and share of customer wallet are being strongly influenced by increasing corporate appetite for new products and service solutions.

"Although they are already heavy product users and are multi-banked, Australian corporates are increasingly avid users of service," East & Partners Principal Analyst Paul Dowling said.

"And banks themselves are increasingly careful about who they work with in this segment," he added.

The latest East & Partners research looked at bank-by-bank market share performance across 27 products, ranging from Cash Management, Debt, Treasury & Financial Markets, Investment Banking and core Transaction services. The study was strongly supported with over 90 percent of Australia’s Top 500 Corporates participating.

The latest results revealed:

The "Big 4" domestic banks’ collective share of the corporate banking products market is falling markedly – down to 49.7 percent from 52.0 percent six months ago as the internationals make gains
Rapid growth in the number of Top 500 corporates engaging secondary transaction banks – a ratio now standing at 62.6 percent
NAB’s falling relationship share in primary transaction banking appears to have stabilised and Westpac’s relationship losses are slowing. CBA has gained most in primary transaction banking relationships over the past six months with ANZ declining marginally
Largest growth in product usage in the Top 500 is taking place in Cash Management, Options, Swaps, Remittance Processing, as well as Commercial Paper and Futures. Although subdued, lending demand remains stable
Reducing product engagement is occurring in FRAs, Project & Structured Financing, International and Domestic e-Banking

"Secondary bank engagement is showing marked lifts across virtually all product spaces, the exceptions being M&A, Corporate Advisory and Particular Industry Expertise where some concentration in service provider relationships is evident," Mr Dowling said.

"Notably, this is being accompanied by increasing wallet share held by the primary banker in a particular product area. This suggests that banks holding non-primary relationships with corporates are being somewhat marginalised, with the dominant service provider owning more of the corporate’s business.

"For the first time in many years, we may be witnessing the flow-through of strong relationship building by the banks among Australian corporates into product ownership with customers," Mr Dowling said.

*Current Principal Corporate Banker - Top 500*
	% of Total Primary Relationships
N: 457	June 2003	December 2002

Westpac	14.0	14.4
ANZ	13.1	13.7
CBA	11.4	11.1
NAB	11.2	10.9
UBS	6.1	5.5
Macquarie	5.7	5.5
Citigroup	5.0	5.3
JPMorgan	4.8	4.7
Merrill Lynch	4.2	4.4
Deutsche	3.9	4.0
ABN Amro	3.7	3.3
BNP Paribas	3.5	3.3
CSFB	3.1	3.3
SG Australia	2.6	2.9
HSBC	2.2	1.8
Goldman Sachs	2.0	—
Bank of America	1.8	1.8
Other	1.7	3.1
TOTAL	100.0	100.0

*Primary Banker "Share of Wallet" - Top 500*
	Average % of Business to Primary Banker
	June 2003	December 2002

Cash Management, Debt and Bonds
Call Money Market	58.1	55.1
Commercial Paper	59.0	56.6
Cash Management	89.8	93.8
Short Term Domestic Debt	88.5	94.6
Short Term FX Debt	89.4	88.9
Long Term Domestic Debt	89.2	87.2
Long Term FX Debt	89.4	87.9
Trade Finance	77.2	78.1
Corporate Bonds	88.4	87.9
Government Bonds	62.6	55.0
Project and Structured Financing	86.4	84.0

Treasury and Financial Markets
Spot FX	50.9	52.4
Forward FX	55.1	53.4
Forward Rate Agreements	66.3	64.0
Swaps	58.3	55.0
Futures	77.1	75.1
Options	64.1	61.4

Corporate Finance and Advisory
Equity Raising	87.2	88.9
Particular Industry Expertise	93.0	91.3
Corporate Advisory Services	92.3	89.4
Merger and Acquisition Advice	92.6	89.7
Capital Structuring	98.3	97.6

Transaction Banking
Domestic e-Banking	95.2	94.2
International e-Banking	93.7	91.2
Payment Processing	97.7	96.5
Remittance Processing	98.3	97.9
International Transaction Banking	93.4	91.9

For more information contact:

Paul Bartholomew
Executive Editor
East & Partners
Tel: 02-9247 5955
Mob: 0410 400 156
paul.b@eastandpartners.com
www.eastandpartners.com