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Speaker 1: The biggest year for commercial banking as well, Wendy Steward

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Speaker 1: of Bank of America saying next year will be a

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Speaker 1: year of change and uncertainty. Certain sectors and industries will benefit,

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Speaker 1: others may not, and please to say that. Wendy joins

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Speaker 1: us now for more. Wendy, welcome to the program. I'm

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Speaker 1: just thinking of the long, long list of things that

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Speaker 1: your clients have to confront in the next twelve months. Taxes, tariffs,

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Speaker 1: the prospective interest rates not coming down as fast as

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Speaker 1: maybe we thought they would only two months ago. What's

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Speaker 1: the number one issue in the conversations you have at

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Speaker 1: the moment, Wendy.

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Speaker 2: Good morning, Jonathan, and thank you for having me. So,

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Speaker 2: you know, when you think about our clients in global

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Speaker 2: commercial banking at Bank of America, you know, we work

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Speaker 2: with over fifteen thousand middle market companies that are based

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Speaker 2: in the US and Canada, and they also do business

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Speaker 2: around the world, and we cover their international subsidiaries. And

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Speaker 2: these clients are publicly traded companies, they're also privately held companies.

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Speaker 2: And we're continuing to see the generation transfer from the

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Speaker 2: second to the third and the third of the fourth gen.

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Speaker 2: And so you know, when you think about all of

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Speaker 2: the things that they're faced. There is a lot of

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Speaker 2: uncertainty as we go into twenty twenty five, and you

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Speaker 2: mentioned a lot of the things that are top of

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Speaker 2: mind for them, increasing considerations around tariffs, taxes, interest rates, inflation,

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Speaker 2: and then also just the geopolitical tensions that we've seen.

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Speaker 3: And you know, let me give you an example.

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Speaker 2: We have a lot of clients over the last eighteen

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Speaker 2: to twenty four months that have looked at what is

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Speaker 2: happening geopolitically. They do a lot of business in Asia,

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Speaker 2: and as they've looked at their China plus one strategy,

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Speaker 2: they have moved some of that business into Asia, and

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Speaker 2: also they've also moved that into other parts of North America,

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Speaker 2: specifically into Mexico.

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Speaker 3: And you all have been.

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Speaker 2: Talking a lot about tariffs and what will that mean

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Speaker 2: for clients, and we've got a lot of question around

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Speaker 2: that still. But I can tell you one of the

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Speaker 2: things they're focused on in Mexico right now is the

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Speaker 2: deflationary environment with the peso, and so we've been working

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Speaker 2: with our clients to help them with that. And I

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Speaker 2: do think that while we see a lot of uncertainty,

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Speaker 2: we are looking at how we turn into opportunity.

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Speaker 1: Well when did let's talk about that a little bit more.

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Speaker 1: Are they are in a position to play offense or

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Speaker 1: are you're finding them making holding back on making big

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Speaker 1: investment decisions, big campex decisions until they've got the clarity

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Speaker 1: on policy into next year.

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Speaker 2: You know, I would say they're not making big investments,

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Speaker 2: but they are making targeted investments. And so, you know,

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Speaker 2: we have seen a lot of good opportunity for our clients,

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Speaker 2: especially you know, when you think about investment banking, and

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Speaker 2: these aren't necessarily some of the M and A that

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Speaker 2: would hit you know, the headlines very broadly, but clients

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Speaker 2: are looking at opportunity to make those targeted investments.

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Speaker 3: And I'll give you an example.

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Speaker 2: You know, we have a client that's based in the

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Speaker 2: southeastern United States, privately held company, and this company did

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Speaker 2: not have an exit strategy. They wanted to take some

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Speaker 2: liquidity off the table and they were looking at that

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Speaker 2: liquidity event. And so in the meantime, we had another

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Speaker 2: client that is based in Europe. That company did not

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Speaker 2: have any US exposure, and so these two companies we

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Speaker 2: introduced them and it was a great fit and enabled

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Speaker 2: the Southeastern company to have that liquidity event they were

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Speaker 2: looking for while also retaining a minority stake in the company.

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Speaker 2: It then allowed the European based company to have that

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Speaker 2: US exposure that they wanted, and we were able to

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Speaker 2: leverage our international expertise to help with that specific transaction.

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Speaker 4: Wandy, This really raises a fascinating question, which is how

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Speaker 4: much are you seeing a rush of foreign companies looking

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Speaker 4: to partner with a US company to get ahead of

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Speaker 4: any potential tariffs or any potential actions from President elect

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Speaker 4: Donald Trump.

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Speaker 2: We are seeing that, and you know, I don't know

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Speaker 2: that I would call it a rush. I think we've

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Speaker 2: had ongoing interest all year as companies around the world

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Speaker 2: are looking at how they can diversify into the United States.

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Speaker 2: The middle market client base that we cover is very

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Speaker 2: attractive to them, and we are in a great position

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Speaker 2: to help make those introductions and to see, you know,

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Speaker 2: where those fits would make a lot.

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Speaker 3: Of sense, and we will continue to do that.

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Speaker 4: Is there a level at which borrowing costs become prohibitive

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Speaker 4: for some of these companies to expand in the US,

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Speaker 4: especially if they're smaller, And we're asking this question as

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Speaker 4: small cats outperform at a time that yields are historically

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Speaker 4: relatively high, at least based in the past ten years.

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Speaker 4: Is that a concern or is that not even on

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Speaker 4: the table.

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Speaker 3: It's not on the table.

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Speaker 2: You know, when we're looking at the interest rate environment

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Speaker 2: in the US, you know, we're expecting that to continue

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Speaker 2: to come down later this year and into next year.

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Speaker 2: And for companies that are outside of the US and

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Speaker 2: might look at exposure into the US, you know, there's

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Speaker 2: the ability to manage that interest rate exposure globally, and

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Speaker 2: you know they can certainly take advantage of borrowing in

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Speaker 2: different currencies depending on what their needs are.

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Speaker 4: Do you get the sense, Wendy, going forward that there

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Speaker 4: has been certainty for some of these smaller companies in

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Speaker 4: different regions to expand, to hire, to make some of

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Speaker 4: the decisions that we heard were stymied by some of

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Speaker 4: the political uncertainty prior to the election.

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Speaker 3: Absolutely.

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Speaker 2: I mean, when we look at our clients, I would

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Speaker 2: say the sentiment's interesting right now. There is a lot

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Speaker 2: of optimism and I think there is some pent up demand.

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Speaker 2: You know, clients I think have been a bit surprised

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Speaker 2: that the economic environment has been more stable than they

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Speaker 2: were expecting that combined with interest rates coming down, and

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Speaker 2: that demand is creating opportunity, you know, and we continue

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Speaker 2: to work with our clients not only as they focus

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Speaker 2: on the geopolitical tensions what that means for them internationally,

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Speaker 2: but also here domestically. And you know, we are continuing

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Speaker 2: to do a lot with clients with the core banking

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Speaker 2: needs that they have, whether it's loans, deposits, really helping

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Speaker 2: them to manage the cash management process. And you know,

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Speaker 2: we have a new client that we've started working with

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Speaker 2: that's based in the Midwestern United States and this company

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Speaker 2: is also doing business in Canada. They have exposure into

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Speaker 2: geographies outside of North America in two different regions, and

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Speaker 2: when they looked at that entire cash management ecosystem that

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Speaker 2: they had to manage, they were doing it on a

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Speaker 2: very manual basis. They didn't have a lot of visibility,

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Speaker 2: they had effects risk that they wanted to take off

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Speaker 2: the table, and so we helped them with our cash

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Speaker 2: pro system to put a solution in place. It is

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Speaker 2: the platform into the bank that is both online and mobile,

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Speaker 2: and it's enabled them to really manage all of this

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Speaker 2: exposure and continuing to grow in a way that is

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Speaker 2: safe secure and very efficient.

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Speaker 1: Wendy, You've given us some really specific examples, and I

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Speaker 1: was just noting down some of the themes. Managing the

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Speaker 1: supply chain in Asia, managing the f exposure exposure particularly

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Speaker 1: down in Mexico, getting a presence to the United States,

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Speaker 1: working that out too, Wendy. What I hear here is

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Speaker 1: the need to be with a bigger player, and that's

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Speaker 1: what we saw coming out of the regional banking crisis

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Speaker 1: as well. Customers were looking to the Bank of Americas

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Speaker 1: of this world. When is that still the same now?

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Speaker 1: If you held onto those clients, you see more clients

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Speaker 1: come towards you. Head of twenty five.

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Speaker 2: We are, and in fact, twenty twenty four has been

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Speaker 2: a great year for US. It's our second strongest year

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Speaker 2: in terms of client acquisition on record, and we expect

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Speaker 2: that to continue into twenty twenty five.

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Speaker 3: And it's for all the reasons you've just cited.

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Speaker 2: You know, our client base is more global now than ever,

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Speaker 2: and they absolutely need a partner who can help them

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Speaker 2: navigate a lot of this uncertainty and turn that into

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Speaker 2: opportunity for them to help them grow.

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Speaker 1: Wendy, this was brilliant. A belated happy Thanksgiving to you

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Speaker 1: and to your family too. Thanks for being with us,

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Speaker 1: Wendy Steward there of Banks America,