Treasury Today Country Profiles in association with Citi

Roche

F. Hoffmann-La Roche Ltd, Highly Commended, Best Cash Management Solution

Henrik Jørgensen, Nordea, Stefan Windisch and Marcus Facciola, F. Hoffmann-La Roche

This solution leverages Roche’s in-house bank and introduces the POBO/COBO model to its affiliates in Denmark, Sweden and Norway. The successful model is now being rolled out in the Asia Pacific region with a pilot in Hong Kong.

Photo of Henrik Jørgensen, Nordea, Stefan Windisch and Marcus Facciola, F. Hoffmann-La Roche.

Stefan Windisch

Cash Manager

Headquartered in Basel, Switzerland, Roche is a leader in research-focused healthcare with combined strengths in pharmaceuticals and diagnostics. The company employs over 91,700 people worldwide and in 2015 has posted sales of 48.1bn Swiss francs.

in partnership with

The challenge

Roche’s in-house bank (IHB) serves close to 300 affiliates around the world from Switzerland. It provides various banking services in 44 currencies to the Roche Group.

In 2013, Roche’s IHB started to implement its full on behalf of setup in the Eurozone. By implementing payments on behalf of (POBO) and introducing virtual accounts for collections on behalf of (COBO), Roche was able to close bank accounts of subsidiaries in various countries. Today the IHB serves as the only bank partner to 20+ companies in more than ten European countries.

With the expertise gained in these implementations, Roche aimed to roll-out the full on behalf of concept outside the SEPA zone to Denmark, Sweden and Norway.

The solution

The base for this concept outside the Eurozone are residential currency cash pools in each country, containing zero-balanced collection accounts per legal (operating) entity and one main account. All accounts in these cash pools are legally owned by and in the name of the IHB and replace the existing bank accounts of the legal entities.

With this the IHB became the single point of contact for the banks, as well as for the affiliates.

As Stefan Windisch, Cash Manager at Roche explains: “The affiliates have no need to hold bank accounts with commercial banks anymore; payments, collections, guarantees and all other services are processed or provided on behalf of in the name of our IHB.”

“Winning this award is of course a fantastic recognition for all colleagues who were involved in the project and for all the efforts we went through. It is as well a motivation to drive other projects or new implementations and to think further of other new innovative concepts.”

This allows Roche to review all current interactions, processes and operations between the current commercial bank and the entities in the respective countries. Inefficiencies were identified and either de-commissioned or streamlined. Processes such as KYC, account opening – and replacement – and payment communication were organised centrally and brought up to the current standard. This included using xml communication for commercial payment instructions (pain.001), bank statements (Camt.53) or credit advices (Camt.54C).

One of the major gains for Roche with this implementation was to have full transparency on all payment and collection processes by providing one banking system to the affiliate in-house.

With this the affiliate has access to the full range of services required locally, but all provided in an efficient way. For example, one daily bank statement, containing all third-party payments, all cash pool movements, intercompany payments/receivables and interest is provided to the affiliate. Instead of relying on an anonymous bank helpdesk, the affiliate can now approach Roche Group treasury for any cash and bank related topics.

Best practice and innovation

Roche’s IHB has reached the next level with the implementation of POBO/COBO in a non-SEPA country.

In contrast to implementations in the SEPA zone, the project in these individually regulated countries has not been a ‘copy/paste’ exercise. Currency specific requirements needed to be understood, considered and adopted across in the IHB.

Despite being a non-resident in these countries Roche’s treasury team has managed to establish all business relevant bank-related processes to fulfil all payment and collection requirements. Hence, the IHB became their only bank partner and serves these Roche affiliates with an increased portfolio of services, such as one electronic statement for all transactions (internal and external), a lean KYC procedure and a globally compliant SOD setup. All this comes with reduced pricing for the affiliate.

This successful model will now be rolled out to Asia with Hong Kong as a pilot. As Windisch explains: “Running subsidiaries without bank accounts has many advantages for the Roche Group with regard to efficiency, transparency, security, standardisation and cost.”

Key benefits

  • Expanding IHB standards with full POBO/COBO setup to non SEPA currencies.

  • Consistent cash management model for Roche affiliates.

  • No local relationship between bank and affiliate.

  • Better control trough efficient, transparent and lean processes.

  • Cost savings.

Key takeaways

Key points to take away are that PoBo/CoBo concepts, with all its advantages, work as well outside of the SEPA zone and in currency countries with individual regulations. It gives opportunities to manage liquidity and bank related processes from outside of these countries, which we at Roche regard as an advantage in terms of efficiency, transparency and compliance, and which might be an advantage for other multinationals as well.

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