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Funny Story

I will not name names but...

In the early 1990s the then CEO of a large Canadian company (Aerospace) was having dinner with his bankers, one of the banker CEOs complained; he was unhappy with his exposure to the company, and that his credit group though the borrower was too risky.

The next morning, his entire loan was repaid, and all relationships was terminated.  The company CEO refused to pay penalties (that the bank was asking) stating that the bank's CEO's comment was deemed to be a notice of termination (he did say this in front of several bemused bank CEOs).  Then bank, which until that time was the company's #1 bank saw 100% of its activities cut:

Trade Finance
Client financing referral

My friend who worked at the bank told me that in those days the cost of terminating the relationship had cost the bank nearly $5 million in annual revenues.  The bank was never re-invited to any syndicate nor were they able to buy the company's debt in the secondary market, because the borrower has a clause in its loan agreement that prohibited the sale of any loans to that bank.

The bank CEO was stupid, to say such a thing in a public forum to embarrass the company shows a tremendous lack of judgment.  The company CEO was also a dick because he behave like a small child.  The bank was not a participant to the companies financial activities long after the CEO had retired!


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