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8/12/2019 TMI204_P18-19_BNPP2_Liquid
1/218 TMI | Issue 204
Treasury prioritiesTom Cools, PricewaterhouseCoopers provided some interesting
statistics on trends amongst corporate treasuries globally (figure 1).
These were derived from a survey that PricewaterhouseCoopers had
conducted during 2011, including 583 respondents. He illustrated
that while funding was the primary concern for treasurers (73%),
60% of treasurers indicated that cash and liquidity management
were priorities. Just over 30% of respondents also indicated that
treasury technology and automation was a key issue.
PricewaterhouseCoopers research, and the experiences of both
BNP Paribas and corporate participants, emphasised that it can be
very challenging to establish cohesive liquidity structures due to
the significant differences that exist between regions. With no
single bank covering every country, a co-ordinated approach is
Optimising LiquidityManagement
required, with strong regional banks that may also work with key
partner banks. There are also differences that need to be considered
from a regulatory perspective. For example, both notional and
physical (zero balancing) cash pools are achievable in Europe, with
a choice of locations for the header account, although there are
some countries that may not be included. In North America,
notional pooling opportunities are far more limited. In Asia Pacific,
while both notional and physical cash pooling are frequently
employed, the countries that can be included are limited.
A global approach to liquidity management atHeinekenNiels van Popta, Heineken outlined the approach Heineken hastaken to optimising liquidity. As a business with a truly global
footprint, and a strong presence and profile in every country in
which it operates, Heineken used to have a largely decentralised
approach to cash management. Daily treasury activities are
delegated to the local operating companies that have
relationships with several local banks. Financing, both short-term
and long-term is typically arranged centrally by Global Treasury.
In 2006, in an effort to centralise visibility and control of cash,
offset debit and credit balances, and manage risk more effectively,
a global notional cash pool was set up with Heinekens global cash
management bank, BNP Paribas. This has grown over the years and
now comprises 85 legal entities across 28 countries, in 18
currencies. This equates to approximately 75% of Heinekens total
revenues.
Niels concluded by explaining that during 2012, treasury will be
reviewing the total number of bank accounts and electronic
A BNP Paribas Cash Management University Panel Discussion
Effective liquidity management is an ambition for every treasurer globally.During the 5th Cash Management University hosted by BNP Paribasworkshop participants discussed some of the ways that they hadoptimised liquidity management with both a regional and global view. Thepanel comprised the following: Niels van Popta, Director Global Treasury, Heineken;
Sirkku Markula SVP, Corporate Treasurer, KONE Corporation;
Tom Cools, Director, Corporate Treasury Solutions, PricewaterhouseCoopers;
Jan Rottiers, Head of Liquidity Management Products, BNP Paribas
Helen Sanders, Editor, TMI (chair)
8/12/2019 TMI204_P18-19_BNPP2_Liquid
2/2TMI | Issue 204 19
insight
the group, accounting for a little less than
45% of group sales, so it made sense that
this was the first priority. KONE selected
BNP Paribas as its primary bank for
European liquidity management, as part of
a global relationship. KONE opted for a
physical cash concentration, rather than
notional cash pool. The header account,
located in Amsterdam, is managed by
treasury, and local accounts in 12 countries
zero balance into this account on a daily
basis (figure 2). Using BNP Paribas
Connexis, KONE has real-time visibility
over both local and header accounts.
Regional vs global cash poolsFollowing the case studies, the audience
engaged the panel in an interesting
discussion about the feasibility of globalas opposed to regional cash pools, and
where best to locate the header accounts.
Overall, the panel concluded that there are
a number of different factors that would
influence this decision. Some of these are
external, such as the tax conditions in
each country, and the currencies to be
included in the pool(s), but others are
internal issues including the treasury
organisation (e.g., global or regional
treasury centres) and its ability to take
maximum advantage of currency cut-off
times within different time zones. The
demand for a global approach to liquidity
management adds an extra dimension to
the way that treasurers evaluate banks
cash management services. Not only does
a bank need to provide the depth of
capability to support customers regional
requirements, but they also need the
cohesion of services and technology to
create real-time visibility and continuous
processing to support integrated, global
cash pooling capabilities.
banking platforms that it maintains. In
addition, Heineken is planning to
automate the sweep from local bank
accounts into its main accounts with BNP
Paribas.
From regional to global: KONECorporationThe audience then heard from Sirkku
Markalu of KONE Corporation, a global
leader in the elevator and escalator
industry with a $5bn annual turnover,
headquartered in Finland. With a presence
in more than 50 countries in every region,
an efficient, global approach to cash and
liquidity management is key. KONE
identified three key focus areas from a
liquidity management standpoint: North
America, Europe and China. Some oftreasurys key objectives included:
Establish a global approach to liquidity
and counterparty risk management
Develop a global USD cash pool
Optimise cash management in the
United States, such as incoming cheque
processing
Review and optimise cash pooling and
liquidity management in China
Build on the capabilities of the existing
shared service centre (SSC) including
incorporating a payments factory.
The first element on which KONE has
focused is to establish a EUR cash pool.
EUR is the biggest single currency within
Figure 1. Major areas of focus amongst treasurers
Source PricewaterhouseCoopers0 10 20 30 40 50 60 70 80
Global banking
Accounng
Cash flow forecasng
Reviewing/improving risk management policies
FX
Enterprise wide risk management
Liquidity
New technology/systems
Cash management
Funding
Checklist for regional pooling
Is pooling (in-country/ cross-border) permitted in the
countries in which we operate?
What tax issues may arise? (e.g., at arms length
intercompany interests, thin capitalisation rules, ) What is the best location for our regional cash pool?
What legal or regulatory issues do we need to consider?
Are there additional guarantees required (e.g., cross-
guarantees , set off clauses, etc.)
Will all operating accounts be included in the pool?
What will the value dating convention be?
Figure 2. Cash pool at KONE Corporation
LocalBank Account
BNP AmsterdamTop Account
(Notional Pooling)
Daily zero balancing
LocalBank Account
LocalBank Account
BNPAmsterdam
Bank Account
BNPAmsterdam
Bank Account
BNPAmsterdam
Bank Account
CorporateTreasury is
managing thetop balance...
...with real-time visibility to localaccounts through Connexis
+ Cash flow forecasts from
companies
Contact : Anne DugiedDeputy Head of Communication for Cash [email protected]