The credit crisis has fundamentally reshaped the banking landscape. It seems inevitable that it will have similarly profound effects on the finances of corporations. Despite the government-backed recapitalisation of many large institutions, bank capital will remain scarce – and expensive. The collapse in confidence in the structured credit markets means there will be little or no scope for banks to distribute risk to investors.
As a result, companies will be forced to rethink their approach to financial management. True, the situation is by no means as dire as in the banking sector. With the exception of private equity-backed buy-outs, most large corporations resisted the pressure to take on leverage during the boom, and have emerged with their balance sheets largely intact.
