Stakeholder Relationship Management Flashcards

Which of the following BEST describes the concept of 'relationship banking' from a CTP perspective?

Answer: A strategic, long-term partnership where the bank provides services beyond pure transactions in exchange for wallet share

Relationship banking involves a strategic exchange: the company provides wallet share and multiple business lines in return for credit availability, pricing advantages, and advisory services.

A treasury manager discovers that covenant compliance for the revolving credit facility will be breached next quarter due to an acquisition. The FIRST action should be:

Answer: Proactively contact the lenders to disclose the anticipated breach and negotiate a waiver or amendment

Proactive disclosure of anticipated covenant breaches preserves trust with lenders and provides the best opportunity to negotiate a waiver before default occurs.

In treasury stakeholder management, the term 'wallet share' refers to:

Answer: The proportion of a company's banking business allocated to a particular bank

Wallet share is the fraction of total banking business (deposits, loans, FX, payments) that a company allocates to a specific bank, used as leverage in relationship negotiations.

Which treasury activity requires the MOST coordination with the accounting and controller functions?

Answer: Financial covenant compliance monitoring and external reporting

Covenant compliance requires coordinated effort between treasury and accounting to ensure reported financial ratios accurately reflect loan agreement definitions.

A company is considering switching its primary banking partner. Which factor should weigh MOST heavily in the decision?

Answer: The potential loss of credit availability and existing credit facility terms

Switching primary banks risks losing committed credit facilities and relationship-based credit terms that may not be replicated immediately by a new banking partner.

When presenting treasury strategy to senior management, a treasurer should PRIMARILY focus on:

Answer: Linking treasury activities to enterprise risk management and business objectives

Senior management presentations are most effective when treasury activities are framed within enterprise risk and strategic business goals rather than technical detail.

In managing external auditor relationships, treasury's primary responsibility is to:

Answer: Supply accurate, complete documentation of treasury transactions and controls

Treasury must provide auditors with transparent, complete documentation of positions, transactions, and internal controls to support an accurate audit.