Get your money's worth from your bank.

"There are more challenges in corporate banking relationships today than ever before," says Frederick Militello, author of a new Financial Executives Research Foundation study, Reassessing Corporate Banking Relationships. And no wonder. Commercial banks are simultaneously jockeying for position as core credit providers and vying for investment-banking contracts, all against a frenzied backdrop of mergers and acquisitions and large-scale consolidation.

The FERF study ties together the disparate elements and tensions in the banking industry, through case studies of 11 companies and four banks. Militello observes, "The 1980s were all about transactional banking, but now both companies and banks are most interested in mutually creating value."

For all of the case-study companies, the focus on becoming a valued customer to banks is a resounding theme. Companies want banks that can demonstrate a commitment to them during the lows and highs of a business cycle. To strengthen their ties, "some companies are reversing the meeting process. Instead of waiting for their banks to call on them, companies are visiting their most important banks," he reports. For example, Northwest Airlines, which values continuity and close contact with its banks, conducts face-to-face meetings with representatives of each first-tier bank at least twice a year. In 1996, Northwest tallied about 150 of these meetings to achieve the relationship commitment it wanted from its banks.

Along with the renewed emphasis on relationship banking, access to credit remains the central concern for companies, says Militello, and for most, commercial banks are still the preferred providers. "The consolidation in and increased health of the commercial banking sector simply proves to companies that commercial banks are their best bet for credit," Militello reports. But at the same time, commercial banks have been struggling to make inroads into advisory and other higher-yielding areas.

This is a major compensation issue for companies, many of whom would like to support their banks' efforts to move into other areas but feel they have a fiduciary responsibility to use banks according to their track records and reputations, he notes. One big reservation, say many companies, is that banks focus too much on closing deals and not enough on excellence of execution.

Yet all the case-study companies were willing to consider using commercial banks for major advisory and security underwriting...