Government banking Featured

7:00pm EDT January 26, 2009

Nearly two years ago, Wells Fargo management asked Tim Kreitzer, government banking manager, to form a specialty markets group that would focus on government banking in the Houston metropolitan area.

In 2005, the Houston region struggled to earn the business of local government entities, winning about 5 percent of the business on which it bid through the request for proposal (RFP) process.

“The approach was scattered and unfocused,” said Kreitzer. “We were trying to win the business of customers that we didn’t know and who didn’t know us.”

Smart Business asked Kreitzer how banks can make more customers aware of the benefits of government banking.

How can banks get their message out to the public concerning government banking?

When we decided to move in that direction, we focused on three strategies. First, we partnered with other areas of the company. We looked at treasury management, institutional brokerage and sales and others as holding the key to our success. By establishing great working relationships with product partners within the bank, we could build deep, long-lasting relationships with government entities. Next, we stayed active in the community and partnered with other team members active in their communities. Finally, we emphasized Wells Fargo’s local commitment that offered more responsive service than the other large banks in town. Our depth of experience and product support allows us to offer more than a small, local competitor.

What should a bank do after establishing its strategies?

Our first order of business was to hire a relationship manager to work with me to start a government banking office in Houston. After talking with existing customers as well as government banking managers in other states, we found it essential that the team members knew Wells Fargo and it was especially helpful if they had a treasury management background.

We brought in a former employee who was working with a competitor after several years with Wells Fargo treasury management in Houston. The team decided that this person’s background and desire to build relationships would be a good fit. And then we set out to build the Wells Fargo brand within the government sector. We identified all of the government entities and started calling on them at their offices and attending conferences that focused on their needs. As we were doing this, we began responding to RFPs that came to our attention.

We have since added additional resources in the form of human capital, including an industry specialist and the team’s administrator, and real capital. We increased our marketing budget to further enhance the Wells Fargo brand throughout the local government community.

We also started to network with internal and external strategic contacts and partners. Internal partners included team members who worked with government customers in the state, including treasury management, institutional brokerage and sales, public finance, corporate trust, merchant services, institutional trust services and community development and specialized lending. External contacts included financial advisers and attorneys specializing in the public sector.

What are some other keys to success?

The key to success is attention to detail, knowing the industry and staying focused. Government entities should look to work with banks that have an established government banking program. Ask your bank if it has a team that specifically manages government relationships. The uniqueness of the industry requires this specialized focus.

One of the challenges of dealing with a large organization is getting to the right person, so it is vital that you establish an effective government banking team in your region.

Do you see much happening in 2009?

In 2009 there will be a plethora of activity within the government sector. It should be the busiest year since 2005 for depository RFPs. In addition, there are many bond issuances on tap since the economic slowdown has impacted the municipal bond markets as well. There have been numerous headlines over the past few months detailing tough economic times across the country and the government sector is facing financial challenges as well.

Some states are facing serious budget shortfalls, which in turn directly impacts the counties, cities and school districts that rely partially on state funds. Fortunately in Texas, these problems are not as severe as in other states, yet. However all signs are pointing to a slowdown of the Texas economy and this could adversely impact our customers. If revenue streams diminish or turn negative, cities, counties and independent school districts (ISDs) will be looking towards other ways to fund budget requirements. This could mean fewer government provided services, pay cuts, staff reductions or new loan/line requests from entities that never used traditional bank lending before.

TIM KREITZER is government banking manager for Wells Fargo in Houston. Reach him at tim.b.kreitzer@wellsfargo.com or (281) 652-4025.