Treasury Today Country Profiles in association with Citi

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Bank Interview: 
John Gibbons, J.P. Morgan

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We speak to John Gibbons about his appointment as Europe, Middle East & Africa, (EMEA) Regional Executive at J.P. Morgan Treasury Services. We also look at risk and efficiency in a new light, whilst examining the metaphorical ‘DNA’ of a treasurer.

John Gibbons

Treasury Services EMEA Regional Executive

John Gibbons was named Treasury Services EMEA Regional Executive in November 2011 with responsibility for the growth of the Treasury Services franchise in region. John has oversight of regional sales, product, client service, implementation, operations, technology and functional partner teams.

John joined J.P. Morgan from Royal Bank of Scotland/ABN AMRO where he was most recently Chief Operating Officer of Fixed Income Sales, Research and Strategy. He has over 20 years of broad experience in transaction services and commercial banking, in senior management and sales roles, at Deutsche Bank and Manufacturers Hanover in Europe and the US. John attended the University of Connecticut. He resides in London.

What does your new role entail at J.P. Morgan Treasury Services?

I joined the organisation to head up the EMEA division of Treasury Services, which includes cash management, liquidity and trade solutions. We have a strong team of approximately 1,400 people working across the region. That includes a large contingent in the UK and people in an additional 40 countries across the region. We also have Global Corporate Bankers in the major markets with whom we work very closely in order to address the full complement of banking solutions that J.P. Morgan offers from financing to asset management. This combination of global expertise and local knowledge allows the team to understand our client’s challenges so we can deliver the best solution across our entire Wholesale Bank.

What projects will your team undertake in 2012?

One of the key projects that the business has over the coming year is to continue to expand our presence in the EMEA region. We recently built out our cash management capabilities in new branches in Saudi Arabia, South Africa, Russia and also Norway, with plans to go into 11 new countries in 2012. That represents an exciting phase of our evolutionary story.

This proactive agenda is focused on the traditional strengths of J.P. Morgan, with the primary mindset that our clients are at the heart of everything we do. We are listening to our clients as they remain cautiously optimistic in their growth plans. This approach supports our vision of being the first choice for global multinational companies operating throughout the world.

How will consistency of service be maintained across these new geographies, in particular where partnerships may be in place?

This is a critical question and let me first answer why. In Treasury Today’s European Corporate Treasury Benchmarking Study 2011, which J.P. Morgan supports, service quality was voted as the most important factor for clients reviewing their core relationship banks, excluding the provision of credit lines.

Our overall philosophy is that no matter what you do with J.P. Morgan, or where you do it, you will have the same level of execution, service and experience that our brand is renowned for. Every country operates slightly differently and our local presence combined with our global franchise ensures consistent delivery to our clients.

Our in-country client service offer is also complemented by Client Service Centres. These provide round-the-clock service to our EMEA clients in 22 languages and ensure that when clients call to ask a question, they get an immediate and accurate response.

Delivering distinctive client service is a priority for us and it is also a differentiator recognised by our clients; our 2011 EMEA Client Experience Survey returned a ‘Best in Class’ rating for our client service officers from 95% of respondents.

“In Treasury Today’s European Corporate Treasury Benchmarking Study 2011, which J.P. Morgan supports, service quality was voted as the most important factor for clients reviewing their core relationship banks, excluding the provision of credit lines.”

We regularly sense check with clients that we are delivering the service they would expect from J.P. Morgan. We do this, day in, day out, and it is what makes us a leader in this regard.

J.P. Morgan has always believed that flawless execution and service excellence lie at the heart of what clients value most and we have built an organisation that consistently delivers on these promises.

Excluding the provision of credit lines, what are the other most important factors to you in deciding which banks to include in your core relationship group?
Diagram 01: Excluding the provision of credit lines, what are the other most important factors to you in deciding which banks to include in your core relationship group?

Source: Treasury Today’s European Corporate Treasury Benchmarking Study 2011, in association with J.P. Morgan

The fact that a top priority for 40% of respondents is to see their banks make further investment into efficient payment systems is significant. Efficiency really revolves around a combination of how streamlined the bank’s operations are and how prepared the client is.

Our role is to continually seek opportunities, working hand in hand, with our clients to make sure their treasury operation is as efficient as possible – whether that be on the payments side, rationalising account structures or reconciling receivables.

We continue to roll-out our single international platform for client accounts, payment services and liquidity structures. Our payments platform supports the firm’s SEPA proposition which is available from multiple J.P. Morgan branches across Europe. With the ongoing economic uncertainty, risk continues to feature at the top of our client’s agenda. According to the Study, one of the top three issues that treasurers felt they were facing in the future was appropriate risk management.

Although traditional risks such as foreign exchange (46%) and interest rate (13%) were key areas for respondents, with both up on last year’s numbers, other areas of risk focus emerged from the findings. These included a growing focus on enterprise risk for 13% of respondents, up from 2.9% in 2010, as well as a determination to reduce the risk of error in treasury information by eliminating spreadsheets from the treasury function.

How interlinked do you believe these risk and efficiency issues to be and how can these challenges be overcome?

Risk and efficiency have never really strayed far from the treasurer’s agenda – they have just become a lot more complex. Clients’ requirements for excellent service and flawless execution play strongly to the efficiency agenda. Errors cost time and money.

By definition, this demands efficient technical capabilities and a strong ethos with regard to risk management. I think that is a particularly unique qualification that we have. It’s not simply that J.P. Morgan manages its own business along a strong risk axis, but that the risk management ethos is embedded in everything that we do as an institution, and equally in everything that we do for our clients.

The continued focus on risk and its implications for businesses, is an integral element of every decision made in treasury. While treasury has always been tasked with managing risk, the profile of the risk management function continues to be elevated with senior executives at Board level seeking a closer involvement in risk identification and mitigation. This therefore leads to heightened visibility of the activities that treasury undertakes, and increased recognition of its value to the enterprise.

Given the concerns that you have highlighted there, as well as the other front line responsibilities that treasurers have today, why should they devote time to benchmarking activities?

Every business unit needs the opportunity to understand how they are performing, versus a best-in-class benchmark. This helps to make sure that their aspirations are market-leading and that they know where they are headed going forward. That is simply a question of best practice.

In terms of the benefits of benchmarking, I believe that it’s not so much a question of how your organisation scores vis-à-vis a competitor, but whether your company or department is asking the right questions of itself. If you have a group of treasurers that have become very actively involved in supply chain finance for example, and your treasury department is not doing that, you need to understand why. It’s about making active choices.

Speaking of supply chain finance, 34% of respondents to the 2011 European Benchmarking Study said that it had increased in importance for their organisation. What is driving this?

There was a historical divide between the supply chain function and the treasury department, but treasurers are increasingly becoming aware of the benefits of their involvement in the supply chain. As a consequence, we are seeing them move into supply chain finance (SCF) more aggressively.

Embracing the possibilities of the supply chain is a way to look at current best practice and future opportunities, again linking back to the question of efficiency and risk management.

One of the main drivers behind this growing interest in SCF is globalisation. We’re living in a connected world at a time when there is a huge amount of uncertainty across the globe.

As a consequence of that, the one thing that a company cannot afford is a disruption in its supply chain. SCF is one way to enhance the smooth operation of that chain.

This is an area that J.P. Morgan has been working on globally for several years now; Caterpillar for example, saw challenges for suppliers who might struggle to finance ramped-up production as the economy recovered post crisis and so rather than use its cash to support suppliers, chose J.P. Morgan to help balance working capital management and supplier liquidity.

“We’re living in a connected world at a time when there is a huge amount of uncertainty across the globe. As a consequence of that, the one thing that a company cannot afford is a disruption in its supply chain.”

We have also invested heavily in some of the best people in the market in this space, with the objective of bringing our global footprint and experience to our clients’ supply chains. That is something that the bank is backing up, not only with people talent, but also with technology investment and a significant balance sheet.

So is it the working capital benefits that are still driving this interest in the supply chain?

Yes, working capital is always a part of this and so too is the stability of the supply chain.

We’ve all witnessed over the past few years what the consequences can be in not having a robust supply chain. Supplier risk has become a regular discussion with our clients whether this is caused by suppliers struggling with economic issues all the way through to natural disaster contingency.

Over the years, the overriding trends driving cash management have tended to be consistent; globalisation, risk management and efficiencies. Personally, I do not really see that changing in the near future.

It is that view that has informed our own strategy and hence the reason why J.P. Morgan Treasury Services is focusing on geographical expansion over the year ahead on the basis of a consistent performance and risk management ethos across every market. We are on an evolutionary journey to continue to extend our capabilities and presence for clients.

Our global expansion is exciting and I am delighted to be at J.P. Morgan at a time of opportunity for our people and our clients.