Treasury & Cash Management Guide 2009

Treasury & Cash Management TCM Guide 2009

Contents Treasury 04 & Cash Bank Relationships Higher cost of credit and tighter credit conditions are prompting corporates to review all their banking interactions. Management 08 Invoicing Guide 2009 Paperless invoicing is gaining popularity as efforts to create standardized processes lot of the traditional services cash management banks provided to their customers gather momentum. A in the lead-up to the financial crisis around collections, liquidity, risk and working capital management are featuring more prominently in discussions between banks and their corporate customers in its wake. Where banks may have talked up a lot of these services in the past, customer appetite for them did not necessarily follow and it 12 tended to be only the large, highly centralized corporate treasuries that opted for some of the more sophisticated solutions, particularly around liquidity and risk management. Risk Management Fast-forward to 2009. Banks are now finding corporates of all sizes want to know Businesses need to develop a new range how they can preserve their cash balances and better manage their liquidity. Not only of tools if they want to achieve truly holistic that, risk management is at the top of the treasurer’s agenda; not just interest rate risk management. and FX risk management, but counterparty, credit and liquidity risk. Most transaction banks have reported substantial increases in their trade and treasury revenues as corporates seek to reduce counterparty risk using traditional letters of credit, which up until recently had been a declining business for most banks. This ties in with an 16 increased focus by treasurers and CFOs on the financial supply chain, where unlocking Who’s Who capital trapped in inefficient accounts payable and accounts receivable processes is Who’s who in treasury and cash something most major corporations are not just talking about or hearing about from management. their banks, but are actually looking to put into practice. Tighter credit is also prompting treasurers to review their banking relationships. The day when businesses would rely on a single European banking provider or global cash management bank is long gone it seems, as corporates look to secure relationships with more than one bank, not only for credit purposes, but also for enhanced risk management. Yet, while the banks that were relatively unscathed by the credit crunch have sought to increase their market share vis-à-vis those that sought government bailouts, market share does not seem to have shifted significantly. Government-assisted banks claim they remain committed to the business and continue to invest in it. However, they still have some convincing to do when it comes to their competitors and some corporate treasurers who are uncertain about these banks’ long-term strategy and their ability to resist pressures to resort to a more domestic focus, which some predict will be a condition of receiving government assistance. On a regional level, however, and among mid- and lower-tier corporate treasurers, the game is anybody’s and regional banks, particularly those in Asia, are finding that they are winning more business that historically might have gone to foreign banks.

Anita Hawser Europe Editor [email protected]

Bank Relationship Management

Strengthening Ties Higher cost of credit and tighter credit conditions are prompting corporates to review all their banking interactions. By Denise Bedell

t has always been a priority for corpo- Mueller, head of country sales, Western is better for the bank because in the past rates to manage their share of wallet Europe, for Deutsche Bank Global Transac- there were trading issues, as traders were Ieffectively. But in this credit environment tion Banking. “People danced as long as forced or pushed or incentivized to take corporates of all sizes and shapes are the music played.” risk to make money elsewhere because the forced to be even more diligent about how Now there is still liquidity available, but they manage their banking relationships confidence and risk appetite are still down, and spread of ancillary business across all although some improvement has been Masquelier: Bank relationship management has completely processes and business units. seen over the past couple of months. changed They are looking more holistically at how “While credit and CDS pricing increased they share business, the credit they receive substantially at the end of last year after a in return and what they are paying for all long period of very low spreads, we have banking services. It is now an essential seen some reductions since early 2009,” part of the job remit of any treasurer to says Mueller. “Nevertheless, investors still ensure they are getting the most out of their expect a much higher risk premium than in banking relationships while also ensuring previous years.” that their banking partners are happy when credit facilities come up for renewal. Repricing Credit Over at least the past decade, with a As a result, corporate credit has become highly liquid credit environment and ever- much more expensive, and many compa- increasing competition among banks to nies have seen their credit partners charge attract corporate clients, companies lived more for credit, reduce participation and in a world of cheap, readily available credit. in some cases remove themselves from They expected cheap lending, and got it, facilities altogether. The cost of funding often with little need to provide much in the has completely changed as banks look to way of ancillary business in exchange. charge market rates for credit rather than “In the past, there was almost unlimited making their profit through other products. liquidity available in the banking sec- One banker notes: “Credit facilities had tor globally, together with high levels of ridiculous spreads 12 months ago. Now confidence and risk appetite,” notes Eric it is getting to a more normal pricing. This

Treasury & Cash Management

corporate lending business was not making “They are more closely scrutinizing One problem, however, is that not all money. Now there is one less incentive to who their banking partners are globally,” banks price equally on ancillary products. take on that kind of risk.” Cummins adds. “Clients want to under- This is where having good data can be Clearly, banks are repricing credit to stand their banking partners, how they invaluable. By extracting information on, for charge a market rate for it, rather than use them, and what the cost is for each example, FX transactions and the pricing seeking to recoup credit cost with ancillary service utilized.” of various banks, a corporate treasurer can business, as another banker explains: Mueller says that Deutsche Bank, for then collate the pricing data of one particu- “Banks want to get a market price for one, is not deleveraging its corporate lend- lar bank versus its competitors and use that credit. It is at a premium, and they want ing portfolio but using this as an opportunity information to negotiate with that bank. to make sure that they are pricing in both to intensify relationships with clients. “The Treasury workstations, third-party their own liquidity costs and the credit risk key is providing clients with intelligent global systems such as trading portals and the of the company.” financing and transaction banking solu- banks’ systems themselves all provide a This tight and expensive credit environ- tions that are not generally available in the wealth of information that can be gathered ment has led to a sea change in the way market,” he says. and used in negotiations with banks. “We corporates manage their bank relation- As bank-corporate relationship analysis take any data we can out of our systems ships. François Masquelier, honorary changes, so do the ways that banks and and use that to explain our share-of-wallet chairperson of the European Association corporates communicate. “We are seeing decisions with our banks,” says one corpo- of Corporate Treasurers, explains: “Bank a lot more communication and transpar- rate treasurer. “If they are complaining that relationship management has completely ency between banks and their corporate they did not get the 10% target we set, we changed. Companies are forced to revisit clients.” says Cummins. “Dialogue is a lot can show them why. That is a great help in their relationship management policies, more open, occurs more frequently and is discussions.” their approach and sometimes even their particularly candid.” As banks increase credit costs and core group of banks. Some banks are In some cases the number of bank rela- demand more ancillary business for that completely changing, some are restructur- ing, some are now state-run, and some are disappearing altogether.” As such, those “In the past, there was almost corporates that have the critical mass and market solidity are strengthening their unlimited liquidity available in criteria for bank partners. Previous criteria for analyzing a bank’s solidity and name are the banking sector globally, no longer enough. It used to be that name was sufficient solidity, but now there is more together with high levels of focus both on rating and on other analyses. “Corporates are reviewing their global confidence and risk appetite” relationship banks and allocation of banking “People danced as long as the music played” — Eric Mueller, head of country sales, business,” says Deutsche Bank’s Mueller. Western Europe, for Deutsche Bank Global Transaction Banking As this review goes on, those banks that took advantage of government support programs create some fears for corporates tionships that companies maintain has also credit, it is essential for corporates to be concerned about the long-term strength increased, as banks look to reduce lending more sophisticated in their bank business and focus of their banking partners. “For participation. Says one treasurer, “Mainly management. Otherwise, the company will those banks with government support,” for refinancing reasons, companies have suffer with higher credit costs and constant he notes, “corporates are worried they will had to increase the number of banks in the demands for more business from its credit focus on local business or that they may syndicate because they are facing liquidity providers. Through proactive management, be forced by governments to focus their issues so have to increase banks to reach companies can not only absorb some of involvement solely in their home country.” the same amount of credit.” that increased cost of credit through lower This treasurer adds: “It is a paradox. ancillary business fees but also have hap- Bank Perspective Where we should keep reducing the num- pier banking partners, solidified lending rela- However, it is not just corporates that ber of bank relationships, some corporates tionships and hopefully lower lending fees are re-examining their bank-corporate are forced to increase the number of banks once markets return to normal. relationships, says Mike Cummins, head they deal with for credit reasons. But when Says one treasurer: “There is no going of large corporate sales for J.P. Morgan. it comes to ancillary business, when you back. The relationships are stronger than “Banks are now looking at their corporate slice a cake in smaller portions, the banks ever, more candid than ever, and both sides relationships firm-wide to ensure they will be even less satisfied. Banks are are being very upfront with issues or initia- meet return requirements for the organiza- always claiming that the ancillary business tives going on within their organization. This tion. It is a more rigorous process than they receive is not sufficient to compen- will continue, and whatever happens, these we’ve seen in the past.” sate [for] pricing.” relationships are changed permanently.” n

E-invoicing

Paperless Payments Take Off Paperless invoicing is gaining popularity as efforts to create standardized processes gather momentum. By Anita Hawser

lectronic invoicing (e-invoicing) tively slowly because of the complexity of says Juha Häkämies, a vice president at may have gone through peaks and implementing change in the business-to- Basware, a global e-invoicing operator. “In Etroughs over the past decade or business transaction environment. the Nordic market for the past five years so when it comes to adoption, but Bruno In a 2009 report on e-invoicing and or so we have had significant growth in Koch, founder of Billentis, an international e-billing in Europe, Koch paints a far more e-invoicing,” says Häkämies. “This year e-billing and invoicing specialist based optimistic picture. In 2008 approximately many companies started saying that they in Switzerland, is optimistic about the one million European businesses and 23 won’t accept any other form of invoice technology’s future. As a pioneer in this million consumers exchanged one billion other than electronic.” space, having introduced e-invoicing e-invoices. This year, Koch predicts that Pundits believe that a number of factors in Switzerland a decade or so ago, it is every day 1,200 businesses and 11,000 are coalescing to promote more wide- perhaps in Koch’s interests to evangelize consumers will become new e-invoicing spread adoption of e-invoicing. One of the a technology that has yet to realize its full users. According to Koch, current e- key drivers will be public sector support, potential in terms of completely eliminat- invoicing volumes in Europe are 1.5 billion says Koch, who expects another three ing the millions of paper invoices compa- and they are increasing at a gross annual or four European governments to make nies exchange every year. From a purely rate of 30% to 40%. “The economic crisis e-invoicing mandatory this year. He is also financial standpoint, however, e-invoicing has accelerated that trend,” Koch points adamant that companies need to change is a no-brainer. Official estimates suggest out. He estimates that e-invoices make their roll-out model if they want more of that within Europe alone, e-invoicing in the up 6% of total invoices in Europe, which their counterparts to adopt e-invoicing. business-to-business (B2B) space could is not bad given that most EU member Instead of trying to convince counterparts result in annualized cost savings of more states only implemented the legal frame- to support e-invoicing, which can take a than €200 billion. So why aren’t more work for e-invoicing in 2004. “E-invoicing long time, a much better approach, says companies sending and receiving invoices has steadily increased since then,” says a Koch, is to bring all partners on board by electronically? bullish Koch. default, but allow companies to opt out Back in 2001, research firm Tower- Adoption of e-invoicing is not uniform if they don’t wish to exchange an invoice Group suggested that less than 1% of the across the EU. Estimates suggest that electronically. According to Koch, the opt 15.3 billion invoices issued annually in the penetration rates vary from 3% to more out model results in customer adoption US and the 12.2 billion invoices issued than 12%. The Nordic countries have the levels of up to 90%. in the EU were generated electronically. highest penetration rates with the top per- Hansjörg Nymphius, chairman of the At the time analysts remarked that the formers in B2B e-invoicing receiving 65% Euro Banking Association (EBA) and direc- e-invoicing market was taking off rela- to 85% of all their invoices as e-invoices, tor of market infrastructures at Deutsche

Treasury & Cash Management

Bank Global Transaction Banking, says likely to exit or consolidate the business. near future as some industries like the au- implementing e-invoicing is far more The key to gaining critical mass, says tomotive industry, for example, have pre- demanding in the B2B space than on the Häkämies, is forging interoperability with existing standards that they are unlikely business-to-consumer side. Unlike B2C other e-invoicing networks. Basware has to abandon overnight. “What is needed where the e-invoice is often linked to the approximately 50 interoperability agree- is a standard that allows for conversion payment, in B2B transactions the payment ments globally with other networks, which without having to change the information comes out of a separate ERP system. contributes 30% of the 10 million true in a given field and can still support the “The focus on the invoice makes sense,” e-invoices it processes annually (2009). e-invoicing requirements of a particular says Nymphius, “but the real benefits in Koch hopes to use an e-invoicing industry segment,” he says. the B2B space are when you optimize the operators’ forum in September to encour- Häkämies says it will be some years whole order-to-pay processing stream.” age support for cross-industry e-invoicing before the EC Working Group’s recom- Häkämies says adoption of e-invoicing standards and interconnectivity as cus- mendations are fully implemented in practice. In the meantime he says e-invoicing operators and invoicing software providers Companies need to change need to work together to establish interoperability alliances for the benefit of buyers their roll-out model if they want and suppliers. However, one major stum- bling block to pan-European e-invoicing more of their counterparts to remains: the need to harmonize legal and tax legislation across the EU. “That is the adopt e-invoicing most time consuming,” says Koch, add- ing that it could take at least three years “A much better approach is to bring all partners on board by default, but allow to change. And while standardizing EU companies to opt out” — Bruno Koch, founder of Billentis e-invoicing regulations will improve clarity and reduce concerns over tax compli- has also been slower in Italy, Germany tomers are demanding a single point of ance, an OB10 spokesperson asks, “Will and Spain where local legislation requires contact. However, getting vendors to co- countries such as Germany and Italy really e-invoices to be digitally signed. In Nordic alesce around a single e-invoicing format allow less stringent rules than they have countries and the UK digital signatures are will not be easy. “Within the EU, there are today? Will countries such as the UK have not required. Koch says the debate now at multiple e-invoicing formats depending on to follow the more stringent rules of these the EU level is whether e-invoices should whether you are sending an invoice from countries?” There is clearly debate to be be treated equally with a paper invoice; in an SAP ERP system or Oracle,” explains had between the member states before a other words if paper invoices don’t carry Häkämies. decision can be made. n signatures, why should e-invoices? In practice, suppliers send their invoice As part of its ambitious Lisbon Agenda, data to e-invoicing providers such as the European Commission (EC) formed OB10 in their standard data format. OB10 Häkämies: Many Nordic an Expert Group on e-invoicing, which then enriches, verifies and translates it to companies are saying they will only accept electronic invoices aims to encourage the development of the data format of their customer or buyer. EU-wide interoperable electronic invoicing So, although many different formats exist, and transmission solutions, independent e-invoicing networks like OB10 act as a of any single infrastructure or technology. translation engine, mapping invoices to the Koch estimates that there are approxi- different formats supported by custom- mately 350 e-invoicing service providers ers. However, few e-invoicing operators and an additional 150 software companies provide any-to-any format conversion. providing solutions. While consolidation The EC Working Group on e-invoicing seems inevitable, he says most providers is promoting a pan-European e-invoicing still believe they could be the Microsoft standard based on a so-called cross- of the future when it comes to setting the industry invoice created by the United standard for e-invoicing globally. So far, Nations’ Centre for Trade Facilitation and none has accumulated the critical mass to Electronic Business (UN CEFACT). Koch dominate the space. says the UN CEFACT e-invoicing standard Häkämies says that e-invoicing service covers more than 90% of all invoices and providers need to process approximately is open enough for any industry to use. five million e-invoices annually to make the While a global e-invoicing standard is business feasible, but smaller players have ideal, Nymphius of the EBA says there is nowhere near these volumes so they are unlikely to be one universal standard in the

Holistic Risk Management

A Whole New Ball Game Businesses need to develop a new range of tools if they want to achieve truly holistic risk management. By Denise Bedell

he world of risk management has and how those investments will affect the participation in credit facilities, and risks changed drastically as a result of viability and financial standing of their bank over the long-term strength of their bank- Tthe economic and credit crises. in the future.” Some companies have also ing partners. They must pay attention to Banks and businesses are changing the increased their total number of banking the terms and conditions of credit facilities way they look at what risks they evalu- partners to act as a buffer should anything and the costs when they mature. ate, and many companies are reviewing happen to one of them, which is still a real At the same time, liquidity risk manage- all risk-related policies—including bank risk in some markets. ment has become a much more impor- selection, asset management policies and Credit risk is also a big concern for both tant part of the job of a treasurer. “We, hedging policies—to ensure they are well- corporates and their banking partners. as corporates, now realize it is important prepared for future risk events. This is a threefold risk as corporates deal at any time to remain liquid,” says one Counterparty risk has changed dramati- with the rising cost of credit, fears that their treasurer. “This is definitely a lesson we cally, as have both credit and liquidity risk. banking partners may reduce or eliminate have learned over the past year.” One of the biggest risks faced by companies and banks alike right now is counterparty risk. At the height of the crisis the big question was, who would survive and who “Banks have always been good at would be lost in the fray, and many companies and banks were unsure from day to measuring, evaluating and man- day who would be next to file for Chapter 11 bankruptcy protection. aging credit risk. Then, about 25 “Counterparty risk is critical for corporates right now,” says Mike Cum- years back, they started improving mins, head of large corporate sales for the way they manage market risk” J.P. Morgan. “They want to understand the risk associated with their banking “And now we come to a third risk category of liquidity risk, which arguably has been partners, the investments they are making neglected in the recent past” — Anders Kvist, head of treasury, SEB

Treasury & Cash Management

Companies are now using more quanti- But in order for these solutions to Kvist, head of treasury at Swedish banking tative tools to better assess the sensitivity properly work they must be fully in- giant SEB, says: “The whole concept of of their portfolios to credit risk and taking tegrated with the ERP, TWS and IT liquidity risk has a lot more focus than ever more sophisticated approaches to quanti- management systems so needed data before, and banks are managing liquidity fying mark-to-market value. “We measure can be pulled out for analysis, otherwise, in several dimensions: the marketability the credit risk of each fund and also the that analysis cannot happen. This is a of securities held, liquidity in funding the aggregation of exposures in our portfolio big challenge for many corporates going balance sheet of the group, and accessing to ensure we don’t face too much risk,” forward: moving beyond Excel spread- short- and long-term funding from different adds the treasurer. sheets to more sophisticated risk tools funding sources.” In addition, risk management hedging and analyses. This is critical not just from a practical policies are changing as companies deal As part of that holistic operational risk financial institution perspective but also with massive market fluctuations and the approach, treasurers must also have a as an agenda-topper for regulators. The impact that has had on their derivatives more in-depth understanding of the pro- question that everyone is dealing with is products. Says the treasurer: “Also we cesses that make up that risk, says Cam- how to curtail liquidity risk at systemically have to think about internal controls. We erinelli. “The treasurer should become important banking institutions. This is not had policies and procedures in place, but a simple question. we must review all of them now.” Cummins: Corporates want to “The way I see it is that banks have understand the risk associated always been good at measuring, evaluat- Using Available Technology with their banking partners ing and managing credit risk,” Kvist says. There is a greater corporate focus on “Then, about 25 years back, they started enterprise risk management, and many improving the way they manage market corporates are now taking a much risk. And now we come to a third risk closer look at how their ERP systems, category of liquidity risk, which arguably treasury workstations (TWS) and other has been neglected in the recent past.” systems can provide data and tools to He says that one interpretation is that mis- help in creating a global, enterprise-wide management of liquidity risk created the risk picture. Particularly with the focus crisis and that now, as banks relearn how that Standard & Poor’s has placed on to manage liquidity, it is the next stage enterprise risk management in corporate in the risk management development of ratings, companies increasingly have financial institutions. a focus on operational risk and how to In order to better manage liquidity risk, manage it on a global basis. banks are reducing their dependence on Enrico Camerinelli, senior analyst for wholesale funding by deleveraging their Europe at consultant Celent, says that balance sheets so overall funding require- corporate dependence on Excel spread- ments go down, and they are working to sheets makes holistic risk management improve the balance between fixed assets impossible. Holistic management requires and their deposit base. In addition, banks new tools and better data integration. are more willing to extend the duration of “Treasurers are seen much more as the more aware of the business processes their wholesale funding, even though that channel that provides information on a that pertain to the physical supply chain comes at a cost. day-to-day basis on cash positions, FX of the company—knowing the needs of “This increasing cost would have a risks and so on,” says Camerinelli. “They the purchasing manager, sales manager, devastating effect on banks’ net interest are under pressure to provide all of this in- supply chain manager, logistics manager income if they didn’t charge a higher cost formation, but they don’t have the means and so on—in order to understand the of liquidity back to their borrowing cus- to because often their basic underlying different inputs and business imperatives tomers,” Kvist notes. As such, corporates systems are not sufficiently integrated to of the working capital chain. Treasurers are now paying not just for their own credit pull out that data.” must make this jump from looking at the risk but also the transfer pricing for the The ERP may have the necessary trees to looking at the forest. A company cost of liquidity and liquidity risk that the data, but moving it from the ERP into a is not just made of financial transactions, banks face. spreadsheet is unwieldy and inefficient. and that perspective is missing right Liquidity is being managed more care- Sophisticated risk assessment tools may now,” he says. fully, but corporate credit customers are already be available to treasurers, as feeling the impact of that. It is a changed treasury management systems—such as Next Stage in Bank Evolution world for both banks and their custom- SunGard, Wall Street Systems, FXpress It’s not just corporations that are changing ers, as both sides of the market work to and Misys—all come equipped with a risk how they measure risk. Banks are also improve their own risk management and management module. changing the way they look at risk. Anders deal with the outcomes. n

Who’s Who

Who’s Who in Treasury and Cash Management

Robert Allen ects, treasury centralization programs and Berk is in charge of banking products and Group Treasurer shared service center projects. He has also services for both corporate and institutional British American Tobacco taken part in an advisory capacity on change business and personal financial services Robert Allen was appointed group treasurer management, complex implementations and banking. The latter includes strategic plan- effective June 2008. Based in London, Al- project management. ning, marketing, product management and len works with a team of 20 professionals product development. He is also respon- across the BAT group on all aspects of Alexandre Barraine sible for the operation of Northern Trust’s global treasury management. His remit en- International Treasury Management federal savings bank, personal financial ser- compasses capital markets and debt, finan- Director, EMEA vices business continuity and vendor man- cial risk management, insurance, cash man- Japan Tobacco International agement. Berk led the development of the agement, banking and treasury execution. Alexandre Barraine recently joined Japan bank’s online services, overseeing the busi- Allen, who joined BAT in 1997, has filled an Tobacco International global headquarters in ness unit’s growth strategies around current array of roles there, including global liquidity Geneva, Switzerland, as a director of inter- and prospective clients. and reporting manager, European finance national treasury management. Before tak- manager, head of finance–UK and Ireland ing his current position, he worked at Magna Catherine P. Bessant operations, and strategy and planning di- Automotive as the director of treasury for President, Global Product Solutions rector in Korea. EMEA and Asia, with a specific focus on Bank of America risk management. Prior to Magna, Barraine Bank of America’s global product solutions, served at Delphi as the regional treasurer, a division of global banking services and covering EMEA, and concentrating on debt wealth management, serves over 140,000 financing, capital structure and dividend re- business and institutional clients world- patriation, cash pooling, treasury software wide. Catherine Bessant’s group designs, implementation and cash-flow forecast. delivers and services integrated credit and Tarek F. Anwar treasury products for business and corpo- Global Head, Transaction Sales rate lending, global payments and liquidity Standard Chartered Bank management, commercial card services, Based in Singapore, Tarek Anwar looks af- trade finance, foreign exchange, lines of ter Standard Chartered’s cash management, credit and equipment finance solutions. trade finance and securities services globally. Bessant, who joined the company in 1982, He moved in May 2006 from San Francisco Donald E. Berk was formerly global marketing executive for to Singapore to join the bank after a 25-year Senior Vice President, Corporate Bank of America. career in the United States, Asia, Europe, the & Institutional Services Middle East and Africa and leading multi- Northern Trust Alan Bieler geography teams. He brings extensive ex- As director of product and process manage- Treasurer perience of all aspects of cash and treasury ment for enterprise banking services at The Marsh & McLennan Companies management, including re-engineering proj- Northern Trust Company in Chicago, Donald Alan Bieler is responsible for worldwide

16 Who’s Who

treasury activities for Marsh & McLennan around the world in support of multi-regional been treasurer since 1997. His primary Companies and its subsidiaries, which pro- or global cash management strategies. As a activities cover treasury operations, liquid- vide global services in risk, strategy and hu- longtime advocate of Swift’s expanding role ity management, financial and operational man capital. After starting at MMC in 2001 in corporate cash management and in the risk management, global tax matters, credit as assistant treasurer, Bieler was appointed funds and securities industries, Campbell and accounts receivable and insurance. He treasurer in October 2006. Before joining has been actively involved with helping Swift is also a member of Tiffany’s pension, en- MMC, he spent eight years at PepsiCo, develop Swift Alliance Lite, which employs terprise risk management, business recov- where he served in a variety of positions, WebSeries as its principal technology. ery and continuity, security and safety com- including director of corporate finance and mittees. In 2008 Connolly was elected vice director of international treasury. He has chairman of the board of the Association for also worked at Cooper Industries and with Financial Professionals. GE Capital Corp.

Pamela A. Carson Executive Vice President, Group Executive for Global Treasury Management and International Mark Constant Ira M. Birns KeyCorp Treasurer; VP, Corporate Finance Executive Vice President and Pamela Carson’s groups at KeyCorp provide & Treasury Chief Financial Officer cash management and trade solutions and Franklin Resources World Fuel Services Corporation services to the bank’s commercial, corpo- Mark Constant manages the corporate fi- Ira Birns oversees the functions of M&A rate and consumer clients. Global treasury nance department of Franklin Resources, planning and analysis, tax, treasury, control- management comprises sales, product and which includes corporate treasury, investor lership, internal audit and investor relations support professionals. Carson began her relations and M&A evaluation. Before mov- at World Fuel Services Corporation. The career at Key in 1992, forming and managing to corporate finance in 2007, Constant company, headquartered in Miami, Florida, ing credit production management, channel was an analyst and portfolio manager with is an $18 billion global provider of marine, management and Internet strategy for the Franklin Global Advisors. Prior to joining aviation and land fuel products and related commercial bank. Previously, she was chief Franklin Templeton Investments in 2006, services at more than 6,000 locations, in- administrative officer for Key corporate and Constant worked as a senior vice president cluding airports, seaports and tanker truck investment banking. Before joining Key, she and senior equity research analyst at Lehm- loading terminals worldwide. Prior to World had held a variety of positions at Citi, ranging an Brothers, where he covered brokers and Fuel, Birns served as vice president and from operations to international to relation- asset managers. During his seven years at treasurer at Arrow Electronics, with global ship management. Lehman he became a regular member of responsibility there for treasury, risk man- Institutional Investor magazine’s All-America agement and investor relations. He is also Andreas Chasapis Research Team and ranked among the top the current chairman of the board of the As- Deputy General Manager, Group Head, sell-side analysts in his sector in the Green- sociation for Finance Professionals, which Corporate Transaction Banking wich Associates survey each year. He is also comprises a global network of more than Eurobank EFG a member of the Wall Street Journal’s All- 16,000 finance and treasury professionals. Since October 2008 Andreas Chasapis Star Analysts Hall of Fame. has headed corporate transaction banking, which is a part of wholesale banking. Chasa- pis, who is based in Athens, oversees the end-to-end performance of cash management, trade services, electronic corporate sales and factoring businesses. He joined Eric Campbell Eurobank in 1994, and in 2003 he was pro- J. David Cruikshank Chief Technology Officer moted to head of the large corporate divi- Managing Director; Head of Global Bottomline Technologies sion in Greece, a post he held until his most Sales and Relationship Management, Eric Campbell is a leading industry expert recent appointment. Treasury Services on the use of web-based cash manage- The Bank of New York Mellon ment products and services. Since helping Michael Connolly David Cruikshank brings a wealth of knowl- to introduce one of the first such solutions to Treasurer edge and experience to his role in carrying the market in 1996, he has played a key part Tiffany out BNY Mellon’s strategic growth initia- in driving the development of Bottomline’s Michael Connolly enjoys a wide range of tives for global payments, cash manage- WebSeries platform, which it has leveraged responsibilities at Tiffany, where he has ment and trade solutions. Having been

18 Who’s Who

active in the cash and treasury manage- and change, and his commitment to client- companies and the public sector. Dummitt has ment industry for 20 years, he has held a focused solutions helped make Treasury and helped AvantGard evolve a comprehensive fi- number of global sales management posi- Trade Solutions one of Citi’s star performers, nancial enterprise suite to manage a company’s tions. They have ranged from head of Euro- achieving revenues of $6.4 billion in 2008. cash inflows, outflows, banking relationships pean marketing, sales and service to global and treasury. This holistic and collaborative ap- head of solution delivery and head of cli- Robert F. Deutsch proach is changing how companies view the ent service and implementations for North Managing Director; Head, Global discipline of liquidity and risk management. To- and South America. He joined the Bank of Liquidity Business day’s firms have developed a primary focus on New York in 2003, was subsequently ap- J.P. Morgan Asset Management optimizing liquidity, mitigating risk and fostering pointed to his current position in October An employee of J.P. Morgan since 1997, Rob- connectivity. AvantGard helps companies drive 2008 and serves as a member of the BNY ert Deutsch currently oversees sales, service free cash flow and reduce inefficiencies across Mellon operating committee. As a featured and business personnel in the United States, the ecosystem of suppliers, buyers, banks and speaker, he delivers industry updates on Europe and Asia, with responsibilities for over other trading partners. topics ranging from USD clearing services $500 billion in client assets. In his previous to regulatory compliance. role he was the national sales manager for J.P. Karen Fawcett Morgan’s US mutual fund business. Deutsch Group Head, Transaction Banking is a member of the J.P. Morgan Funds man- Standard Chartered agement operating committee. Before joining The global performance of all transaction bank- the firm, he worked for Goldman Sachs Asset ing products at Standard Chartered, including Management as a client adviser, after starting trade finance, cash management, securities his career at Hewlett-Packard, where he mar- services, commercial banking and electronic Christian Dahlberg keted HP’s commercial computing solutions banking channels, rests in Karen Fawcett’s President and General Manager, New York to Fortune 500 companies. hands. She leads the group’s efforts to drive SEB Group rapid revenue growth across transaction Christian Dahlberg manages the New York banking products, for all client segments, to branch of SEB, which serves the North Euro- support wholesale banking’s core bank strat- pean banking group’s core clients in the North egy. Before undertaking her current mandate, American market. Clients include Nordic and Fawcett directed the development of global German subsidiaries that conduct business wholesale banking strategy, as the bank’s in North America, as well as US corporations Christopher Donus head of strategy, outserve and marketing, at and financial institutions active in Northern Assistant Treasurer the wholesale bank. Fawcett joined the bank Europe. Prior to his New York post, which Freescale Semiconductor in 2001 from Booz Allen Hamilton, where she he took up in 2004, Dahlberg was client ex- In July 2008 Christopher Donus joined Fre- was vice president and partner, with a focus ecutive for client relationship management in escale Semiconductor in Austin, Texas, as on the financial services sector in Asia-Pacific. Stockholm for SEB Merchant Banking. assistant treasurer, where he is in charge of all aspects of corporate finance, financial risk management and cash management. Before joining Freescale, Donus was the assistant treasurer, corporate finance, at Hertz Global Holdings for three years. During that tenure he oversaw all fi- Francesco Vanni nancing activities, including both asset-backed Kenneth Frier d’Archirafi facilities and traditional corporate loans. Before Chief Investment Officer CEO Global Transaction Services joining Hertz, Donus worked in the treasury de- Hewlett-Packard Citi partment of Lucent Technologies. Kenneth Frier’s team at Hewlett-Packard As CEO of Citi’s Global Transaction Ser- is responsible for the investment of $30 vices, Francesco Vanni d’Archirafi presides billion in retirement plan assets in the US over a business that processes more than and at HP’s foreign subsidiaries. Under $3 trillion in payment flows daily. Operating in Frier’s leadership, HP was one of the first over 100 countries, GTS handles more than companies to fully immunize its US defined one billion transactions a year. In 2008 the benefit plan, moving entirely out of public business delivered revenues of $9.6 billion Kenneth R. Dummitt equities and into a fixed-income asset/ and net income of $3 billion, which repre- President, AvantGard overlay strategy near the stock market sented 34% year-on-year growth. Previ- SunGard peak in 2007. In Frier’s 25-year treasury ously, d’Archirafi was head of Citi’s Treasury Kenneth Dummitt’s goal, at the helm of Sun- career, primarily at HP, Disney and Oracle, and Trade Solutions business for two years. Gard’s AvantGard, is to deliver liquidity man- he has raised over $15 billion of funding in He is known as a catalyst for innovation agement solutions for corporations, insurance the term debt market and more than $30

20 Who’s Who

billion in share repurchase spending (in- His entire career has been in treasury, during tion system and back-office director for Al- cluding three large structured transactions) which time he has held numerous positions. catel-Lucent, needed to connect disparate and supervised over $100 billion a year of systems and worldwide offices, as well as derivatives transactions. Suzan F. Hamdy a Swift partner. His commitment to innova- General Manager and Head of Capital tion and ongoing development helped Alca- Michael Gallagher Markets Group tel-Lucent—which delivers voice, data and Executive Vice President Banque Misr video communications to end-users in more HSBC Bank, USA At Banque Misr, where she is also a member than 130 countries—find a solution to man- Michael Gallagher looks after payment and of the executive committee, Suzan Hamdy age its growth effectively. Under his supervi- cash management in North America and works for the second-largest public sector sion, the company implemented AvantGard has management responsibility for HSBC’s bank in Egypt, with assets under manage- Treasury and AvantGard Payments. As a re- global bank notes business. Gallagher, who ment of more than EGP35 billion ($6.3 bil- sult, Hourseau and his group have improved has more than 20 years of transaction bank- lion). Prior to her current post, she served visibility to cash payments, reduced costs of ing experience, joined HSBC in 1997 as a as head of research and development at payment processing and streamlined bank- senior vice president, head of corporate and the Arab African International Bank (AAIB). ing relationships. The system is now widely institutional sales. Prior to HSBC he held a Hamdy has amassed over 25 years of ex- deployed throughout the world at 200 busi- variety of senior positions at CoreStates Fi- tensive banking experience, including work ness units with more than 700 users. nancial in Philadelphia, Tokyo and New York. at AAIB banking divisions such as project finance, remedial management, investment James G. Graham banking and marketing. She is a member of Executive Vice President the board of directors of Taba Tourism De- PNC velopment and a member of the Egyptian James Graham, executive vice president Capital Market Association. and business executive of domestic and Marcus Hughes global treasury management, brings to Director of Global Marketing this role his substantial experience at PNC Bottomline Technologies and elsewhere. As business executive for Bringing more than 20 years’ experience in national corporate and business banking the software and banking industries, Mar- and deputy head of corporate banking, he cus Hughes helps corporate treasury and earned credit for having expanded PNC’s E. Judd Holroyde financial services institutions devise and array of products and financial services. Senior Vice President, Global Product implement strategic initiatives for cash man- Before joining PNC in 1992, Graham was Management & Delivery, Wholesale Banking agement, trade finance and supply chain au- managing director at Bank of America glob- Wells Fargo tomation. He has held senior positions with a al payments services. Judd Holroyde oversees wholesale and con- variety of European banks, including Banco sumer foreign exchange, global treasury man- Santander. Today, he plays a significant role agement, global financial institutions, global in shaping the development of Bottomline’s payments services and trade. In 2000 Holroy- product roadmap, expanding the company’s de joined the newly formed wholesale Internet brand and continuing its focus on customer- and treasury solutions team, spearheading facing programs in North America, Europe the strategy and design of the customer ex- and Asia-Pacific. Hughes has authored- ar David J. Gutschenritter perience for Wells Fargo’s Commercial Elec- ticles in industry trade publications on top- Executive Vice President, Treasurer tronic Office (CEO) business Internet portal. ics such as the migration to electronic pay- State Street Within five years of its launch, 75% of the ments and emerging regulatory guidelines As EVP and treasurer, David Gutschenritter bank’s wholesale customers became CEO affecting international payments. reports to the CFO of State Street. He is the portal users. In 2004 Holroyde established treasury department head, with responsibil- the first customer advisory board, in which a Bart Ivens ity for balance sheet, investment portfolio panel of wholesale banking customers gives Global Head, Sales Payments & Cash and interest rate risk management activi- feedback on firsthand experience with Wells Management ties worldwide. Gutschenritter joined State Fargo products and services. This concept ING Street in May 2004 as the director of capi- has grown to eight advisory boards, repre- Bart Ivens launched his career in 1985 with tal planning and subsequently became the senting more than 95 customers worldwide. Bank Brussels Lambert, which is now part managing director of global liability and capi- of ING. His post at that time was head of tal management, before being named as Xavier Hourseau global clients and area manager for the Nor- treasurer. Prior to State Street, he spent 22 Director, IS & Operations dic countries. He followed that role with an years at FleetBoston Financial (now Bank of Alcatel-Lucent assignment as head of sales in financial mar- America) and one of its predecessor banks. Xavier Hourseau, who is treasury informa- kets. Ivens is currently global head of sales

22 Treasury & Cash Management

for payments and cash management within countries and a network of more than 2000 ING wholesale banking. correspondent financial institutions, Kam- back’s strategy enables clients to optimize cash flow, manage liquidity and make payments more efficiently around the world. Melissa Moore Chief Executive Officer J.P. Morgan Treasury Services Dinkar Jetley Despite unprecedented financial market vola- Head of Trust & Securities Services and tility and one of the most challenging business Cash Management for Financial Institutions, climates in history, treasury services at J.P. Global Transaction Banking Chris Leone Morgan achieved double-digit revenue growth Deutsche Bank Group Vice President, Fusion and GRC in 2008. On a firm-wide basis, the group gen- Dinkar Jetley has established Deutsche Applications Development erated revenues of $6.5 billion during that Bank as a leading global provider of pay- Oracle period, up 15% over the prior year. Melissa ments and securities services. GTS contin- Chris Leone leads the strategic direction Moore, who is responsible for the business ues to invest in its technology, accommo- at Oracle for developing the Fusion appli- globally, oversees all aspects of product and dating the latest regulatory requirements cations suite, including the ERP and CRM service direction and delivery. As the world’s for the Single Euro Payments Area, includ- functional domains that treasurers use largest cash management bank and number- ing direct debits and the payment services worldwide. In this role, Leone is respon- one US dollar clearer, J.P. Morgan averages directive. Under Jetley’s leadership, the sible for driving the business requirements, $3.7 trillion in transfers daily. Even at the start bank has increased its share of the insti- functional investment priorities and broad- of the economic downturn, during the tumul- tutional cash management market by se- er business strategies, as well as for the tuous months of September and October curing significant payments clearing and strategy and development process of the 2008, under Moore’s steady guide treasury private-labeling mandates. He has also emerging GRC applications suite. Prior to services broke its own records by clearing overseen the expansion of the trust and his role at Oracle, he developed enterprise values up to $5.05 trillion in a single day. Her securities services business into new mar- software applications at PeopleSoft, where leadership proved instrumental in maintaining kets, becoming one of the largest provid- he headed product management activities access to expertise, resources and infrastruc- ers of trustee and paying agent services in of the company’s Financial Management ture—often on short notice during the crisis. the US and global capital markets. and Enterprise Performance Management product lines. Erin O’Brien Group Manager, Payables and Receivables Randstad Before Randstad implemented receivables technology, the Sydney, Australia-based global Eric D. Kamback staffing company (formerly Vedior) was utiliz- Executive Vice President; Chief Executive Andrew Long ing a number of tedious and time-consuming Officer, Treasury Services Group General Manager and Head of manual processes in their credit and collections The Bank of New York Mellon Global Transaction Banking department. Erin O’Brien realized the impor- Following his appointment as chief execu- HSBC tance of locating a single, automated solution tive officer of the treasury services group Andrew Long was appointed group gen- that could help streamline the firm’s order-to- last fall, Eric Kamback sharpened the focus eral manager in May 2008, having headed cash processes and would offer a consolidated on strategic growth at The Bank of New global transaction banking since January view and centralized means of accessing es- York Mellon. He has put in motion a series 2007. GTB products include payments and sential customer data. O’Brien’s decision to of initiatives aimed at market segments and cash management, trade finance and sup- bring in a receivables automation solution has global geographies with attractive growth ply chain services, securities services and provided the company with the necessary tools potential. The key drivers for this process wholesale banknotes. Long joined HSBC to better manage its data and to establish best are increased globalization and conver- in 1978 in the imports department in Hong practices in the receivables environment. gence of cash management and treasury Kong and subsequently worked in a num- needs at the C-suite level of financial man- ber of positions throughout Asia. He contin- Kevin Odiorne agement. As hallmarks of steps taken under ued his career in New York and the United Assistant Treasurer and Vice President, his leadership, solutions and products and Kingdom, eventually becoming head of op- Finance services have been integrated across the erations and processing for the Asia-Pacific Simmons Bedding Company broad reach of BNY Mellon’s capabilities. region in 2001 and chief operating officer for Kevin Odiorne oversees all treasury re- Serving an enterprise with locations in 34 HSBC in the region in 2004. sponsibilities for the world’s second-largest

23 Who’s Who

bedding manufacturer. He joined Simmons rector and chief financial officer of Invesco since in 2001 to head up the company’s exter- October 2005. Previously he held the post of nal and internal financial reporting and has senior vice president and chief financial officer subsequently played a key role in all of Sim- at Janus Capital Group, after working in se- mons’ equity and debt financings, includ- nior corporate finance roles at Putnam Invest- ing the 2003 sale of Simmons from Fenway Gary Silha ments, Lehman Brothers and Morgan Stanley. Partners to Thomas H. Lee Partners for $1.1 Assistant Treasurer Starr serves as director and is past chairman of billion. Odiorne was also a member of the Tenneco the Association for Financial Professionals US team at the 1999 World Half-Marathon Gary Silha is directly responsible for worldwide Championships and a 2000 Olympic Trials treasury operations at Tenneco, a $6.2 billion qualifier in the marathon. auto parts supplier. Prior to joining Tenneco in 2000, Silha served as director of worldwide Russell L. Paquette treasury operations at American Can Company Treasurer and manager of cash and banking at Ingersoll REI Recreational Equipment Milling Machine Company. He has a total of 25 Werner Steinmueller Russell Paquette is treasurer of REI, a $1.4 years of treasury operations experience and Head of Global Transaction Banking billion national retail cooperative that pro- has held numerous board positions during his Deutsche Bank vides quality outdoor gear and clothing. He is 22-year involvement with the Treasury Manage- Under Werner Steinmueller’s leadership, responsible for all aspects of REI’s corporate ment Association of Chicago, including presi- Deutsche Bank has provided a stable, safe ha- treasury, ranging from the investment portfo- dent and co-chair of the Windy City Summit. ven for its clients’ assets and payment process- lio, line of credit, enterprise-wide risk man- ing activities. The bank remains the premier euro agement and insurance, to banking struc- clearer worldwide, with more than double the ture, cash management operating platform, volumes of its nearest competitor (Target2), and investment relationships and foreign ex- stands out as a global clearing provider, with top change. As of year-end 2008, Paquette was positions in three major currencies: euro, dollar responsible for up to 17% of REI’s total asset and pound. Taking the lead on the Single Euro base. In both 2007 and 2008 he was rec- Paul Simpson Payments Area and other industry initiatives, ognized by the national AFP, which honors Global Head of Treasury and Trade Steinmueller oversees strategic geographic and professionals who have reached the top of Solutions, GTS network expansion across developing markets their fields of treasury and corporate finance. Citi in Asia, Europe and Latin America. Paul Simpson was recently appointed to run . Treasury and Trade Solutions, the largest division of Citi’s GTS business, which offers an integrated set of cash management and trade solutions to corporate, financial institution and public sector clients worldwide. Prior to his lat- Daniel Peltz est appointment, Simpson led multiple global Dennis Sweeney Executive Vice President, Group Head, businesses with GTS, including wholesale card Deputy Treasurer Treasury Management services, public sector business solutions and General Electric Wells Fargo healthcare solutions. Under Simpson, the com- Dennis Sweeney has been with GE, where he Daniel Peltz directs GTS management mercial cards business has grown by 20% in is currently in charge of global cash manage- services for Wells Fargo’s corporate and revenues since 2008. Citi’s prepaid business ment, since 1992. He and his team operate commercial clients, overseeing a team of has expanded globally from North America, and from their base in Stamford, Connecticut, and 1,500 product, sales, delivery and market- the bank has implemented the world’s single through regional treasury centers in Dublin, ing professionals. After Wells Fargo’s recent largest public sector commercial card program. Delhi, Shanghai, Tokyo, Mexico City and São merger with Wachovia, the combined trea- Paulo. Earlier this decade GE and its software sury management organization, which Peltz vendor co-developed the first web-enabled now supervises, became the second-largest treasury workstation. Sweeney later pioneered treasury management organization by mar- corporate access to the Swift network and has ket share. As a 19-year Wells Fargo veteran, led GE to be the largest corporate user of Swift Peltz was involved in developing the Com- services. He is also the driving force behind the mercial Electronic Office portal, the bank’s Loren Starr Twist BSB standard for electronically invoicing patented Check 21 solution, and the CEO Senior Managing Director, Chief Financial international bank service fees. Sweeney is Mobile Service, with which Wells Fargo be- Officer now looking to integrate GE’s direct-to-bank came the first major US bank to offer corpo- Invesco solution for automating queries into the Swift rate mobile banking. Loren Starr has served as senior managing di- enquiries and investigations message set. n

24 Contributed Article: CIB

CIB LEADS STRONG EGYPTIAN MARKET While most countries continue to feel the effects of the global economic crisis, Egypt remains slightly affected by the downturn. Egypt’s CIB bank is taking advantage of this fact and is determined to continue its strong domestic growth.

t a time when most banking markets around the world free trade agreements have been signed with major econo- are simply trying to hold on until the crisis is over, Egyp- mies such as the EU, and the government has undertaken a Atian banks continue to grow. Egypt’s growth potential is comprehensive privatization programme. The World Bank has clearly on the radar of global firms, and Egyptian bank CIB is ranked Egypt among the top 10 global reformers in three of poised to reap the benefits. the past four years, and Egypt is now a major destination for CIB is the largest financial institution in Egypt by market offshoring and outsourcing. capitalization—with a total market capitalization of more than Recognizing the growth potential and solid fundamentals of EGP14.5 billion ($2.6 billion)—and saw net profits after taxes of the Egyptian market—and of CIB within the Egyptian mar- EGP910 million in the first half of 2009. The bank enjoyed return ket—private equity firm Actis recently invested $244 million in on average equity of 30% for the first half this year, and return CIB to acquire 50% of the stake held by the Ripplewood con- on average assets of 3.02%. The bank’s sortium, making Actis the largest single net interest margin rose to 3.98%—up CIB’s growth is investor in CIB. CIB’s growth is driven from 3.77% for the first half of 2008—in by strong, proactive risk management the face of falling interest rates. driven by strong, and a disciplined business model. Egypt has weathered the global Conservative lending practices and a economic storm exceptionally well, proactive risk concentration on deposit-gathering with plentiful liquidity and little or no continue to help strengthen the liquidity exposure to the poisonous assets management position of CIB. Since the beginning of still clogging up the global financial and a disciplined the first quarter in 2008, the bank has markets. The regulatory environment been proactively reducing its foreign for financial institutions in Egypt has business model currency exposure with customers traditionally been quite conservative—a it considers potentially vulnerable to characteristic that has well served the banking community exchange rate risk. Foreign currency loans have declined by throughout this crisis. Although no market is completely im- 4.1% since December 31, 2008. mune to the global economic malaise, the effects felt in Egypt CIB has consistently grown its corporate and consumer have been reasonable, at times where developed markets market share for the past five years and continues to focus reached rock bottom. on both domestic growth and increasing its regional foot- Banks in Egypt find themselves in an enviable position print. The bank is taking a relationship-driven approach to of operating within a growing economy with a developing create cross-selling opportunities and to continue its solid customer-base. The Egyptian banking market is bolstered growth trend. by solid domestic demand, underpenetrated markets and an As such, CIB presents a unique chance for global firms underleveraged corporate sector. With 76 million citizens and looking to invest in the Egyptian market. At a time when few a growing middle class, there is increasing need for personal markets are palatable, let alone appealing, CIB provides the finance and savings products. At the same time, Egyptian chance to invest in a strong, growing institution in the solid regulators have worked hard to make Egypt an attractive Egyptian market, which continues to be slightly affected by market for investment. Corporate taxes have been slashed, global woes. Contributed Article: Deutsche Bank

MANAGING ASIAN PAYMENTS While making EUR and USD payments to Asian beneficiaries can present unique challenges, a new approach from Deutsche Bank aims to mitigate many of the difficulties faced by financial institutions, says Catherine Syn, Head of Cash Management FI Strategy Asia-Pacific at Deutsche Bank

or banks and other financial institutions based in Europe Indeed, with many individual markets at different stages of and the US, making payments to beneficiaries based in development and a fast changing regulatory landscape, Asia FAsia can present a range of challenges, many of which presents a unique and heterogeneous set of challenges for have been exacerbated by the financial turbulence of the past payments and cash management professionals. As a result, 18 months. Aside from difficulties that can impact the timely many institutions may find that they can derive significant transmission of funds—discrep- efficiency gains by addressing ancies in payment or beneficiary some aspects of their pay- information, for example—the Deutsche Bank’s ments processing for Asian- financial crisis of 2008 and sub- based beneficiaries. sequent economic downturn Asia Gateway Aside from these issues have highlighted the importance Initiative leverages of fragmentation between of maintaining adequate liquidity markets, the tightening in the resources to banks that offer a combination of credit markets seen in 2008 significant payment services. highlighted the importance of Of course, any regional player different tools to maintaining efficient intra-day making payments to beneficia- liquidity management, espe- ries outside of its home markets manage EUR and cially when offering payment may encounter difficulties as a USD payment flows to services to clients. And while result of language, time-zones no bank or financial institution or a lack of in-country reach. Asian beneficiaries would have fully escaped the However, the sheer range of effects of the financial crisis, different markets in Asia—especially in terms of their relative Deutsche Bank’s sound financial standing allowed it to main- development and geographical scope—makes local expertise tain ample liquidity to service its clients’ business needs as crucial to efficiently handling payments destined to the region. well as its own. And a lack of on-the-ground coverage can also severely impair any efforts to investigate complaints from beneficiaries THE ASIA GATEWAY INITIATIVE regarding erroneous or missing payments. Deutsche Bank’s Asia Gateway Initiative leverages a combina- Unlike the EU and the US, from a transaction banking tion of different tools to manage EUR and USD payment flows perspective, Asia remains an extremely fragmented region. to Asian beneficiaries. Aside from offering the benefits of our Contributed Article: Deutsche Bank

extensive geographic reach—which ensures on-the-ground mitted to developing its technology and continuing product in- coverage in key markets and a 24 hour follow-the-sun operat- novation to ensure that clients can make the best of the chal- ing model which synchronizes with the Asian business day— lenging economic environment. Indeed, 2008 saw the launch the Gateway also delivers several value-added services. of a range of initiatives that will contribute to our integrated With time-sensitive payment execution becoming an package of solutions for clients in Asia, and those wishing to increasingly popular tool for efficiently managing liquidity, access Asian markets. Deutsche Bank has developed a proprietary delivery service Examples of these include FX4Cash—which allows clients known as Very Early Processing (VEP). VEP begins the pro- to effect payments in over 120 currencies through a single cessing of transactions in the evening (Eastern Time) before account, thus creating efficiencies in terms of reconciliation, value date, allowing MT103 payment advices to be released liquidity management and account maintenance—and Global to overseas beneficiary banks in Asia whenever required dur- Cash Concentration (GCC), which provides for compre- ing their business day regardless of hensive intra-day investment and any time-zone differences. Payments sweeping options to maximize clients’ can also be made using a range interest revenue. of channels including CHIPS and A key product currently under Fedwire. development is MT 202 COV, a new Working in conjunction with VEP, industry SWIFT payment format the Direct Customer Transfer (DCT) expected to be rolled out in Q4 2009. service eliminates cover payments, While often considered a solely US allowing clients to save on messaging initiative, Deutsche Bank is approach- and reconciliation costs. Upon receipt ing the new format from a wider per- of a client instruction, Deutsche Bank spective and has established a global immediately dispatches payment ad- project team to ensure full coverage vice to the beneficiary bank. Thanks on a world-wide basis. While the mes- to our extensive USD and EUR ac- sage format currently used for cover count relationships, most payments payments, the MT 202, omits some of can be credited to the beneficiary the information carried in the underly- bank’s account on our books. And ing MT 103, the new MT 202 COV due to our comprehensive correspon- format will provide for replication of all dent banking network and database information contained in key fields on of SWIFT keys, payment orders can the MT 103. be sent directly to any beneficiary Catherine Syn, Head of Cash Management Considering the industry impact of bank around the world. FI Strategy Asia-Pacific at Deutsche Bank the MT 202 COV, we have observed A perfect compliment to both VEP a shift in the behaviour of many and DCT is Future Advising, especially for clients that require banks in favour of making serial payments, whereby one the beneficiary bank to be pre-advised. With this service, financial institution transmits the entire instruction—i.e. the Deutsche Bank will advise the payment’s beneficiary up to MT 103—to the next institution in the payment chain and two business days prior to value date and payments can then each member of the chain receives the same level of detail be made according to the client’s release schedule. about the transaction. Deutsche Bank is certainly sensitive to the drivers leading A LEADING PROVIDER institutions to make such choices and is seeking to work with Deutsche Bank’s leading position in EUR and USD clearing clients to fully understand the implications of the MT 202 COV has been affirmed by strong payments traffic over recent and develop solutions to accommodate the new payment years. 2008 saw Asian EUR and USD volumes increase by funding. However, we firmly believe that there are benefits to 44% and 51% respectively, with EUR market share currently the traditional cover and pay settlement model for the understanding at around 34%. Total year-on-year EUR growth lying parties in a commercial transaction. And through using also grew by 25.4%, easily outstripping overall market a partnership approach and leveraging services such as DCT growth of 15.4% in 2008. Deutsche Bank also currently has and VEP, Deutsche Bank aims to support its financial institu- the best CHIPS straight-through-processing (STP) rates in tion clients’ efforts to minimize investment outlay while main- the industry. taining the ability to offer market-leading payment services to Despite market conditions, Deutsche Bank remains com- their corporate and retail client base. Contributed Article: RBS FAIR TRADE: WHY SUPPLY CHAIN FINANCE PAYS OFF

With cash flow now a higher priority than ever for most corporates, the world’s leading banks are finding innovative ways to free up working capital for their clients. A resulting trend has been the increased convergence of cash and trade banking solutions: supply chain finance (SCF) programmes that integrate seamlessly with transaction processes—and support buyers and suppliers alike.

ccording to Ron Kalifa, Head of Global Products for straight-through processing. The ultimate goal is to deliver Global Transaction Services at The Royal Bank of a seamless user interface that covers cash, trade and cards AScotland (RBS), the integration of cash management too—a truly comprehensive working capital solution.” and trade facilities is a logical step forward for banks and their corporate customers—a progression that makes strategic BEST OF BOTH WORLDS: and business sense. HOW SUPPLY CHAIN FINANCE WORKS Kalifa says: “Trade facilities, by their very nature, involve SCF programmes effectively see both sides of a fundamental payments and give rise to cash flow and foreign exchange commercial issue—addressing not only the goal of the buyer transactions along a company’s supply chain. For corporate to pay as late as possible but also the supplier’s need to organizations that are supplied largely by small and medium receive payment as early as possible. enterprises, SCF programmes can ensure that all their sup- By signing up to a SCF facility with a bank such as RBS, pliers are dealing with the same bank—reducing costs and buyers can negotiate extended payment terms, while sup- helping treasuries, and ultimately suppliers too, gain visibility pliers get the option to receive early payment from the bank and control over their working capital.” at a discounted rate. The buyer increases its days payable SCF programmes are a rapidly growing business for RBS, outstanding (DPO) with participating suppliers and, in doing which currently manages more than £3 billion in facilities of so, improves its working capital position. Even better news this kind across all major industry sectors. Governments and is that suppliers can do the same, reducing their days sales multilateral institutions, including the World Bank and the outstanding (DSO) by selling their invoices to the bank. Bank of England, approve—and are backing the use of sup- All of which has a positive impact on the supply chain as ply chain finance to help jump-start stalled global trade flows. a whole, limiting any disruption of the manufacturing line and And recently the G20 made a $250-billion commitment to giving the buyer the chance to support key suppliers with support trade finance around the world. much-needed liquidity. Suppliers, meanwhile, get access to a Kalifa explains: “As demand grows for the closer integra- reliable source of competitively priced, off-balance sheet, on- tion of cash and trade solutions, we are increasingly able to demand funding—based on their buyer’s credit rating. link purchase invoice and payment technology platforms for Another important benefit of SCF programmes is improved Contributed Article: RBS

visibility and control of cash flow provided by electronic banking platforms. Typically, suppliers can log on to an online view of their trading account with the buyer—including invoices, debit notes, remittance advices and payment dates. This data can then be seamlessly integrated with other banking systems to enable companies to automatically manage their liquidity structures and payments processes. As Kalifa states: “RBS recently put in place a trade finance facility for key suppliers of a global beverage company. Based on the success of this facility in improving the suppliers’ financial positions, the buyer has asked us to deliver a SCF programme for more of its core suppliers across multiple countries. Similarly, we leveraged our cash mandate for a leading confectionery manufacturer to set up a Europe-wide supply chain facility for its core suppliers. Of course, any receivables Ron Kalifa, Head of Global Products for Global Transaction financed by a supply chain facility must be free and clear of Services at The Royal Bank of Scotland liens and eligible to be pledged, which can restrict a supplier’s eligibility to participate in a programme. We work with buyers relationships, our customer achieved an increase in DPO from and suppliers to address this potential risk early in the process.” 45 to 90-100 days with its SCF facility”, explains Kalifa. “The automated solution we put in place to manage the facility will DELIVERY CHANNELS AND CHALLENGES also lead to a reduction in the company’s operational costs.” As more and more corporations look to link their cash management and trade facilities to offer end-to-end payables solutions, RISK REDUCTION AND NEW OPPORTUNITIES demand for SCF programmes is clearly growing. A greater Clearly, SCF programmes ask banks to take on the com- proportion of key suppliers are opting to reap the benefits of mercial risk of the buyer—and in today’s financial climate, existing facilities, and buyers are up-sizing their programmes to credit insurers are less likely to provide adequate cover. But increase the flow of funds through their supply chains. according to Kalifa, this could spell a major opportunity for Larger facilities and standardized processes may be high government-supported export credit agencies (ECAs). He on corporate wish lists, but many companies will be funded says: “To help minimise counterparty risk, RBS is in discus- by more than one bank—and won’t have the capacity to sions with a number of ECAs regarding increased activity in invest in new infrastructure. the trade finance arena.” “The demand for cost-effective, multi-bank solutions in a Another way to manage counterparty risk could be for constrained credit environment has seen an increase in the trade and supply chain assets to be widely distributed in the use of bank-owned platforms, such as RBS’s MaxTrad™ or financial markets. Again, as a leading trade finance organisa- Supplier Finance solutions, as well as non-bank third-party tion, RBS is actively involved in this growing possibility. “At platforms,” says Kalifa. “At RBS, our strategy is to support our the end of the day, we support any process that helps inject clients’ funding needs regardless of the technology solution additional liquidity into our customers’ supply chains,” Kalifa they choose. This flexibility means that companies can inte- adds. “In fact, SCF management as a whole could lead to a grate our cash management, trade and payment processing range of opportunities across the sectors. SCF management capabilities into their existing front- and back-office systems platforms such as RBS’s MaxTrad™ are increasingly able to with minimal disruption to their processes or supply chain. accept and integrate information from external parties such as We are comfortable utilizing a number of platforms, whether logistics providers, which can be used to either increase levels our own proprietary solutions, third-party or client-owned of financing or reduce prices, based on lower risk profile. Few systems, and believe this gives us an unparalleled capability other banks have invested capital in developing the interfaces to meet our clients’ SCF needs.” that make this possible.” So, end-to-end trade and cash transaction processing has Ultimately of course, client needs will shape the future of moved well beyond the concept stage. But, as yet, it is only a transaction banking products. Right now, protecting cash is reality in isolated and largely bespoke examples—and remains the biggest priority for most corporate treasurers and CFOs. an aspirational solution for all but a few companies. The increasing conversion of cash and trade solutions make Thanks to RBS, a major European telecommunica- SCF programmes a key component in improving an orga- tions group has been able to take advantage of this type of nization’s working capital cycle and ultimately in freeing up integrated solution. “With no negative impact on supplier trapped corporate cash.