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Article
Finding Opportunity in Crisis
By
Bob Grasing
President
First, the bad news. It is an old myth that the Chinese word weiji (危機 translated as "crisis") is made up of two characters—one meaning danger, the other opportunity. JFK employed this myth routinely in his speeches, and it was then appropriated by Richard M. Nixon and others. The usage has been adopted by business consultants and motivational speakers and has gained great popularity in universities and in the popular press. For example, in 2007, Condoleezza Rice repeated the misunderstanding during Middle East peace talks; Al Gore did so in testimony before the U.S. House of Representatives Energy and Commerce Committee, and in his Nobel Peace Prize acceptance speech. I am a little befuddled why speech writers don't check Snopes.com before adding such quotes—Kennedy and Nixon excused.
The good news: there is a reason this myth is so pervasive and persistent. It goes beyond the drama of the two symbols and a western bias for inspirational oriental wisdom. It is appealing for a very simple reason—many people believe it to be fundamentally true that there is opportunity in a crisis. There is sufficient statistical and anecdotal evidence that this is the case. Emerging markets generate more millionaires per year as a percent of their population than established markets. Industrial market segment leadership change is its greatest during periods of turmoil. Optimists often say when a layoff is announced, "When one door closes another door opens." But more relevant to our current banking and economic crisis, consider what we are hearing in the marketplace:
 | Banks without sub prime mortgages in their asset mix or securitized packages at risk in their investment portfolio are looking at the industry massive deleveraging as an opportunity to capture market share of their weaker brethren. One CFO told me last week that he had a commercial lender from a competitor walk a 25-year client across the street to his bank to get a needed loan. The competitor could not bank the loan due to a concentration problem and a need to lower assets.
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| Another Bank CEO indicated he was going to apply for the Treasury's second wave of capital infusion and will use the funds for acquisition. In fact, the Treasury has stated that it will assess each application as to how it will be utilized with a bias toward system consolidation. You have evidence of that with the recent announcement of PNC acquiring National City Bank with the funding received from the Treasury.
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| The CFO of another client told me they were going to concentrate on securing new clients with a deposit strategy targeting new customers and new deposit dollars using the C.D.A.R.S. program as a tool.
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| Another CEO of a Midwestern bank said that he was paying much attention to improving his operating efficiency and concentrating on his collections activities. They were positioning the bank for their planned increase in "targeted new customers" while getting stronger in both the income statement and balance sheet.
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They all see the opportunity and are prudently taking the necessary steps to limit their risk as they take action. A crisis is painful and full of difficult choices. A bank can become overwhelmed easily with the negative market news, and it is nearly impossible if they are forced to shrink assets. However, as we have seen in previous industry upheavals (including the thrift crisis and the commercial real estate crisis) during our 36 years serving the banking industry, the opportunity window is open and it is always most significant at the beginning of a crisis. The Nolan Company stands ready to help your bank find that window and position itself to get stronger. Take advantage of this significant opportunity with our assistance in consolidation, operating efficiency improvement, or collections activity and incentive redesign. I'd be glad to personally share some of our relevant experiences and advice. Please email me at bob_grasing@renolan.com or contact me at 800–653–1941.
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