More to the point, HSBC still lacks infrastructure–specifically a branch network and a wholesale lockbox operation that extend beyond New York's borders–to make a significant dent in the domestic cash management market. Gallagher promises that will change soon. HSBC now is rolling out its first nationwide wholesale lockbox service and picking up more domestic wire and ACH disbursement business all the time from Fortune 500 companies, especially when HSBC is part of their credit group, he explains. "I called on a Fortune 500 company recently about an Asian currency RFP and reminded the treasury executive that we also wanted to be considered for their domestic disbursements," he recounts. "They had never considered us as interested in that business, but a month later we got an RFP for their domestic wire business."

On the plus side, HSBC claims to have doubled its institutional and corporate business, by revenue, in the past five years. "We're consistently rated the best cash management bank in Asia, and for global overlay RFPs. If the list is five long, we're on it, and even if it's three long, we're usually in the running," Gallagher contends. "With operations in 80 countries and territories, we have an interesting footprint. We are also among the 15 largest U.S. banks in assets."

HSBC faces stiff competition in the U.S. and not just from the obvious U.S.-based heavyweights–BofA, Citibank and JPMorgan–when it comes to global banking. First, many U.S. companies are looking for regional best of breed rather than one global overlay bank. This kind of beauty pageant expands the number of U.S. contenders and puts HSBC up against a group of domestic power hitters that lack global networks, such as Wachovia, Wells Fargo and Fleet.

But over the past several years, a couple of other European-based banks, Deutsche Bank and ABN Amro, have also made headway in their quests to become global bankers for U.S. companies. "Deutsche Bank has made tremendous strides," says Jeff Wallace, managing partner of Greenwich Treasury Advisors, based in Greenwich, Conn., "while HSBC, always an outstanding Asian bank, has a decent European network and could be a contender."

ABN Amro is a bit of a curiosity since it had been quite ambitious, but began to pull back on credit lines a couple of years ago. "If there's one thing a treasurer never forgets, it's a bank that reduces his credit line," Wallace notes.

Choosy Bankers

Amsterdam-based ABN admits to having fewer corporate customers these days, but that is "a sign of the times," argues G.M. Stetter, the newly recruited executive director and head of working capital management sales for North America. "With credit tight, corporations have learned that they can't keep a large group of banks happy, and banks have discovered that it doesn't pay to be a fringe bank. We've moved on to fewer, deeper relationships."

Rather than withdraw from global cash management, ABN has refocused its marketing, Stetter insists. And to some degree, even ABN's hiring of Stetter, who is well known in cash management circles as Merrill Lynch's former vice president for cash management and an ex-chairman of the Association for Financial Professionals, indicates that the bank is interested in keeping the share of the marketplace it finds desirable. "We took a good look at our customer base and where our profits were coming from. If a relationship didn't show good present or future prospects, we may have withdrawn from that relationship. Demand for credit is also a factor. It's still our goal to be among the top three global banks. Only Citibank, Deutsche Bank and HSBC can match our global footprint. Morgan and BofA are closing brick and mortar and relying more on agent banks, and HBSC is more of a middle-market bank," he says.

With such a relatively short list of suppliers with real cross-border operations, there's no question that it has become a seller's market. "These banks have their own lists of the global companies they think they can do business with worldwide on a profitable basis," Bastianen explains. And if your company isn't on it, it may slow your quest for consolidation.

That's not to say that companies with clout don't play one bank against another to some degree since the A-list of companies is only so big as well. Ask Webber Lee, assistant treasurer at DuPont, who is more than happy to encourage competition among his three key global banks, BofA, Morgan and Citi, rather than give one the global overlay spot. Ironically, this pattern also tends to slow down consolidation to some extent.

But does every company need a global overlay bank for true banking efficiency? The global banks obviously would answer "yes," despite the fact that providing that liquidity overlay is not a highly profitable activity for ROI-conscious banks. Still, becoming the overlay bank can bring rewards in other, more lucrative business.

One-Shop Banking

For cash management, it just works better to solve a problem once in one way with one bank than to cobble together many different solutions with many banks in many countries, insists Dan Rosenstein, head of global corporate cash management sales for Deutsche Bank in North America. With today's lean treasuries, the fewer banks a corporation has to deal with, the fewer points of breakage there will be, the less it will cost to set up an efficient structure and the less time it will take to maintain the arrangement, he argues. There is also a definite advantage to looking globally instead of regionally at functions like vendor payables, payroll or even liquidity, Rosenstein notes.

Consultants, in contrast, are beginning to suggest that in the case of consolidation there may be too much of a good thing, arguing that only those with tremendous volume should even consider concentrating it daily. "That a multinational corporation needs to use a single bank to manage cash globally is a complete myth," says Susan Hillman Griffiths, a partner in Treasury Alliance LLC in Lake Bluff, Ill. "Their money would be better spent on internal restructuring, assessment and systems improvements."

Some treasurers agree. "Operationally, it's efficient to have a single bank overlay," says Judith Schrecker, Alcoa's treasurer for North America. "Three or four years ago, I'd have made that a goal, but we can manage without it. You can do it with a treasury system. You can even do it with a spreadsheet, although there are inefficiencies."

That may be true, but banks counter that while you can keep track of cash, you can't necessarily keep it flowing. "A treasury workstation can bring transparency to balances and cash positions, but only banks can make the funds flow," insists John Purciarello, treasury management executive in BofA's global treasury services operation. "Setting up accounts with banks so that funds flow automatically, especially when you use notional pooling, is a key part of the value we offer. Clients don't have to pull the trigger."

For companies not among the Fortune 250, the question is moot since their volumes are unlikely to attract many overlay offers. Greenwich Treasury's Wallace suggests they can do it themselves anyway by buying a workstation to collect balance information and using SWIFT 940 and 960 messages to move money around. "Set up the workstation to get access to the SWIFT network through your primary bank," he says. "Of course, it's a damned nuisance to set up each little bank account."

As Dave Potterton, a JPMorgan Treasury Services vice president who specializes in workstation and bank integration, puts it: "Both models work. The choice is dictated by company attitudes about control, what they consider strategic and what they're willing to outsource."

Will demand among disappointed buyers bring more competitors into the market? Bastianen believes that is possible if strong regional players merge. But DuPont's Lee is skeptical. "It takes a lot of time and money to build a global banking franchise," he observes. "I don't think we'll see new players enter that market."