Opportunities in a recession

Opportunities in a Recession:

There are economic clouds on the horizon with many predicting a global recession in the next 12 to 18 months. During recessions, banks and credit unions typically hunker down by carefully managing margins, cutting costs and tightening underwriting criteria. These actions are critical to protect shareholder/member value; however, these tactics open the door to others who are able to be aggressive.

Investing: Stock markets are hardest hit during a recession. This usually results in a flight to cash. Aggressive high rate savings and term deposit pricing offered through traditional and broker channels can attract significant balances and share. Direct Banks with small books (Alterna Bank, Motusbank and Oaken Financial for example) or those who distribute through the deposit broker channel (Equitable Bank) are well positioned to be pricing leaders during a recession.

It may also be opportune to hire mutual fund sales professionals. Commission only agents may feel the squeeze during a recession and be receptive to a change.

Commercial Lending: Some lenders dramatically change their underwriting criteria in a recession which may result in quality business being available to those with a reputation for lending expertise, fairness and consistency.

Mergers: Smaller banks and credit unions may no longer be viable in a recessionary environment. This presents a great opportunity to seek out acquisitions at advantaged pricing.

Branding: Banks and credit unions who stand by their customers in difficult times (by skipping mortgage payments for example) have an opportunity to stand out in recessionary times.