Be nice to the banks

Pity the poor banker. In the game of life he aspired to be a player, maybe even the scorer. Instead, all does is provide the kit. If this wasn't bad enough, he incurs everyone's wrath whenever he wants his ball back.

I like banks and bankers. They are always nice to me and, as a firm, Simmons & Simmons has always enjoyed the best of relations. I put this down to a number of reasons.

We spread our financing arrangements across four major banks. They compete for certain aspects of our work, generally on grounds of price and quality of service, and they are aware of this.

I maintain a fairly rigid line between those elements of the business which I expect to be covered by partners' equity (working capital) and those which I expect to be covered by debt (capital investment). This means the banks have a guide to their likely level of exposure over the medium-to-long term.

I try to keep our banks up to date on the progress of the business and our plans for the future. I have found that honesty always pays off in the end. Personal relationships, in particular, are the key to business dealings and investing time in nurturing them pays dividends.

Another advantage of dealing with a number of clearing banks is that these banking relationships can also be extended to overseas offices. We have been able to obtain the necessary overseas banking services from our existing banks, apart from one exception in Hong Kong.

This has a number of advantages. Your bank can warn you in advance of any specific points that need to be addressed and sort things out for you. The formalities are fewer, especially when it comes to agreeing mandates etc. Problems also tend to be fewer and resolved quicker, and best of all, it tends to be cheaper.

The key, of course, is the personal relationship. Knowing who to call and feeling confident they will give you what you want makes life a lot easier. It also means your bank manager will take a personal interest in ensuring everything works properly.

If you open an office in a country where your bank can't provide you with a service then it may be able to recommend another bank in the locality with which it has a relationship.

Alternatively, you could set up a facility with a local bank. The downside to local arrangements is that, because the new office has no trading history or assets, the London office may be required to provide some form of security for the facility.

So, in summary, be nice to your existing bankers. You never know when you might need them.