Client Profile
A long-term Allfin client, who owns a portfolio of five pharmacies and multiple property holdings with total loans amounting to $11.5 million, faced challenges with their 30-year relationship with Bank A.
Despite the Bank A’s history of supporting the client’s purchases, the interest rates had gradually drifted upwards over the past six years. Although a couple of pricing reviews had been conducted during this time, the rates had not remained competitive unless specifically reviewed. During the latest review, Bank A was hesitant to adjust the rates due to outdated valuations on the client’s properties, further complicating the situation.
Understanding the need for more competitive pricing to effectively manage costs, our team at Allfin took a proactive approach.
The Challenge
Recognising that the client’s existing rates were no longer favourable, our team initiated a review of the client’s interest rates and overall financial structure. To strengthen their position, our team advised the client to re-value four of their pharmacies at a cost of $15,000. This strategic move, leveraging the improved valuations, which then enabled us to negotiate better terms for the client.
Exploring Options
To ensure the client received the most competitive offer, Allfin tendered all of the client’s facilities to multiple banks. This tender process created a competitive environment, forcing Bank A to reconsider its initial stance. In response, Bank A dropped their rates to retain the client’s business. Although Bank A’s revised offer was not the cheapest, it was competitive enough for the client to maintain the majority of their portfolio with them.
However, to maximize their strategic advantage, the client decided to move one pharmacy, with a loan of $2 million, to Bank B. This decision diversified the client’s banking relationships, giving them the benefit of having two banking partners for future acquisitions. As a result of Allfin’s efforts, the client saved approximately $58,000 per annum in interest costs after all expenses were accounted for.
The Outcome
The outcome of this case demonstrates how Allfin’s proactive and strategic approach can lead to significant financial benefits for clients. By splitting their banking arrangements, the client not only secured substantial savings but also gained increased flexibility to leverage better rates in the future. The tender process also ensured that Bank A remains competitive, balancing the client’s loyalty with financial prudence.
Allfin’s commitment to continuously managing and optimising client relationships ensures that even long-standing banking partnerships can deliver the best possible financial outcomes, especially in challenging economic conditions.
Contact the Allfin team today to talk about your options.