Treasury Today Country Profiles in association with Citi

Lindner

Lindner Finanz, Highly Commended, Best Process Re-engineering Solution

Photo of Sven Matzelsberger, Joana von Krüger and Peter Schädelbauer

The Lindner Group operates globally with more than 40 companies. Due to the steady growth of the group and its international expansion, the finance department had to evolve quickly and efficiently. Until 2006, there was a banking department that focused on clearing. In 2008, the first treasury management system was introduced group-wide.

Photo of Sven Matzelsberger, Joana von Krüger and Peter Schädelbauer.

Peter Schädelbauer

General Manager/Head of Group Treasury

The Lindner Group is Europe’s leading company for interior fit-out, façade construction and industrial insulation. With more than 45 years of experience in development and implementation of individual, high-quality project solutions, Lindner manages its production plants and subsidiaries in more than 20 countries.

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The formation of Lindner Finanz GmbH as an independent in-house bank at the end of 2009 crowned these developments. In addition to complex legal and fiscal problems that needed to be addressed, a short-term TMS upgrade – to Bellin’s tm5 – was necessary, a trading platform had to be implemented, and a cash pool had to be converted. But setting up the in-house bank, which provides financial and related services exclusively for the parent company, subsidiaries and sister companies within the Lindner Group, was just the start. The medium-term implementation of an independent and self-sustaining bank for the group was in itself a whole new project and has produced numerous efficiencies.

“It was important for Lindner Finanz to become a distinct group company with its own management, which would be authorised to make independent decisions. The interests of the in-house bank do not necessarily have to mirror the interests of the group as a whole,” explains Peter Schädelbauer, General Manager/Head of Group Treasury. “Lindner Finanz examines deals like an external bank, using conditions offered by external banks as a comparison. The group bank concept was taken seriously and the in-house bank has the right to refuse deals or funding.”

In fact, decisions are made independently and individually, with the counterparty risk assessed both internally (group companies) and externally (banks/capital market).

Moreover, Lindner Finanz keeps track of the funding structure and takes measures or makes suggestions to ensure that the Lindner Group maintains its good rating and remains investment grade. In addition to funding related responsibilities, Lindner Finanz functions as the company’s netting centre. All internal settlements are handled by the in-house bank, which minimises the amount of internal cash flows, which in turn has led to reduced payment transaction costs.

An interest and cash pool, also run by Lindner Finanz, allows the group to optimise its liquidity management, to reduce refinancing costs and/or to optimise the interest result. A cost-benefit analysis is created for every deal and considered in the calculation of the margin. The Lindner Finanz works without cost allocation, only with margins. “All group companies are requested to invest in the group bank. However, since the bank offers attractive conditions, the obligation to contract is no longer necessary. All cash lines and trading limits are with Lindner Finanz. The main objectives are to guarantee liquidity at all times and simultaneously minimise the risk of loss,” says Schädelbauer.

Risk management and working capital management have greatly improved since the implementation of the in-house bank. Security and the control of liquidity have also been optimised.

“We have proved that it is possible to construct a truly functional treasury and an in-house bank as an independent company within a short time frame, jointly with Bellin. The banking department has become a modern treasury, and the treasury is now a modern bank. The bank is ready for a DIN ISO 9001 certification, which is in preparation and will be achieved in 2013 at the latest,” concludes Schädelbauer.