Treasury Today Country Profiles in association with Citi

Emirates Global Aluminium PJSC

Emirates Global Aluminium PJSC, Winner, Best in Class Benchmarking

Emirates Global Aluminium PJSC Treasury Team

This company has developed a ‘Quality Index’ which has proved to be a very open and transparent way of evaluating their banks’ performance and provides feedback and plan improvement, thus going a long way in enriching its relationship with its banking counterparts.

Photo of Emirates Global Aluminium PJSC Treasury Team.

Toby Shore

Senior Director, Group Treasury Risk & Insurance

Emirates Global Aluminium (EGA) is a 50/50 joint venture company held by Mubadala Development Company of Abu Dhabi and the Investment Corporation of Dubai. EGA is an aluminium conglomerate with interests in bauxite/alumina and primary aluminium smelting; with plans for significant local growth and international expansion.

The challenge:

Viewing banks and counterparties as valued business partners, rather than as simple service providers, laid the foundation for the development and implementation of a Quality Index which enables the company to interact with its relationship banks in a manner that is synonymous with their corporate treasury philosophy of security, liquidity, flexibility, diversification, yield and partnership.

The development of a Quality Index also acknowledged the fact that managing banking relationships is not possible unless they can be measured. There was no transparent platform for benchmarking, evaluating and providing open feedback to banks on the services rendered. The objective was to have a clear ranking of performance of the banks based on a quantitative and qualitative analysis. It was hoped that the benchmarking index would also allow EGA to further engage in two-way communications and provide rationale and a framework for the allocation of EGA ancillary and other treasury business provided to these counterparts.

The solution:

EGA treasury initiated the ‘EGA Quality Index’ with the aim of establishing stronger ties with its relationship banks and giving them feedback on the quality of their services and offerings driving ancillary business allocation. The new endeavour sought to assess banks and their relationship with EGA and to rank their performance based on a number of qualitative and quantitative measures. The measures consist of:

  • Assortment of funded and non-funded facilities offered and their pricing.

  • Quality of cash management services.

  • Participation in various treasury technology systems.

  • Ease of facility documentation.

  • Responsiveness of the relationship team to day-to-day issues.

  • Level of support in trade finance.

The primary elements of the Quality Index are:

  • Identification of key areas for evaluation, such as cash management, treasury operations and trade finance.

  • Assigning individual weightings to these key areas, for example 15% of the weighting to trade finance.

  • Collating qualitative feedback from the various teams that interact with the banks such as cash management, export trade, accounts receivable and treasury operations.

  • Collating the quantitative measures such as loan pricing and bank charges/fees.

  • Agreeing and assigning a four-point rating model, excellent = 1 point, good = 0.50, needs improvement = 0.25 and unsatisfactory = 0.00.

  • Compiling the scores and modelling the final rating.

As Toby Shore, Senior Director, Group Treasury Risk & Insurance explains, “The members of the treasury team are given a set of questions (based upon the above criteria) that help them rate the banks for their performance for the given quarter. These responses are then collated and each bank is ranked using a certain matrix.

The final rankings are presented to the banks during the face-to-face quarterly relationship meetings where the strengths and concerns are discussed in detail and next steps agreed. With transparency of business in mind, banks’ performance in this survey holds direct bearing on business allocation. EGA’s Quality Index has provided an important platform to voice the company’s views and enriched the relationships we have with our banking counterparts.”

Best practice and innovation:

The Quality Index survey process has been found to be a very open and transparent way of evaluating the banks’ performance. It provides feedback and the opportunity to plan improvements, thus going a long way in enriching EGA’s relationship with its banking counterparts. This has been widely acknowledged by all their banking counterparts.

Key benefits:

  • Reduction in bank charges.

  • Cost savings.

  • Time taken to implement solution and realise benefits.

  • Productivity gains.

  • Process efficiencies.

  • Interest savings.

  • Pricing enhancements.

  • Risk removed/mitigated.