Top 100 CEO Interviews
Issue No. 49 - October/November 2009
Brace for the second funding shock
As outlined in the South Australian Top 100 Companies Index coverage last year, the Global
Financial Crisis significantly affected global and local financial markets.
The Commonwealth Bank has been working with its South Australian customers assisting them to structure and secure their capital requirements through this difficult cycle.
While other enterprise-level firms made news for the wrong reasons, Top 100 companies were
warned, advised, and acted quickly to address their refinancing issues.
Tables in the following pages show how SA’s Top 100 have managed through some difficult times
and relative to other States have travelled well under the circumstances. Todd Roberts, Head of Institutional Banking SA and NT and Justin Shaw, Head of Markets SA and NT at the Commonwealth Bank are of the view that mid-tier companies in particular, could be vulnerable during the next year as their short-term finance deals come up for renewal in a credit market that is still difficult and is yet to stabilise.
Todd and Justin agree that all businesses need to continue to work closely with Australia’s major banks, and to manage their capital requirements in the most effective manner. Top 100 businesses have led the way in this area.
Bear necessities
Following the collapse of Lehmann Brothers last year, liquidity became difficult for global financial institutions and as a result for most enterprise-level businesses.
While margins are stabilizing, and the differential between low-risk and high-risk lending is more clear-cut, bank funding costs remain volatile because of the competition for capital and liquidity.
This has led to significant increase to corporate margins – the cost of risk – but as the Reserve Bank of Australia has been cutting its rates the overall cost of funds has significantly reduced overall.
The increase in risk cost will impact ‘middle market’ enterprises, those carrying...
