Treasury Today Country Profiles in association with Citi

Middle East Corporate Treasury Benchmarking Study

Middle East Benchmarking Study 2012

Introduction

Treasury Today has been writing about corporate treasury for over a decade. We continue to strive for excellence and to provide unbiased insight and analysis of the treasury trends and best practices. We are, therefore, delighted to publish this second report on the findings of this comprehensive Middle East Corporate Treasury Benchmarking Study in association with J.P. Morgan. It provides further insight into the community we serve.

This edition builds upon the Benchmarking Study we conducted during 2011 and incorporates a new section on Key Performance Indicators (KPIs). Each of the regional studies, which comprise Europe, Latin America, Asia-Pacific and Middle East all now include this new KPI section. North America will be added during 2012.

Social and political change in the Middle East region has dominated the headlines throughout 2011. This has brought with it challenges for companies operating in the area as these findings illustrate only too well. Treasurers, in particular those working in the markets where uprisings took place, are still having to deal with investor concerns, tightened credit lines and an increased cost of borrowing for some.

But in many ways, this is prompting companies to become more creative with their cash management and to adopt global best practice. Supply chain disruptions due to the turmoil have also ‘forced the hand’ of many corporates in the region, encouraging them to look at innovative solutions such as supply chain financing. Moreover, the importance of watertight corporate governance policies and well-formed contingency plans has also been highlighted.

This progressive mind-set did not purely arise from the Arab Spring, however. Rather, the uprisings merely accentuated trends that already existed. The treasury market in the region has become increasingly sophisticated over the last decade.

Nevertheless, according to Alastair Fiddes, Head of Financial Risk Management at Mubadala Development Company, “The understanding of treasury and risk is slightly different in the Middle East market, as I am sure they are in other emerging markets. A number of businesses in the Middle East still operate on legacy working practices that are now considered ‘behind the curve’ when compared to best practice in the Western markets.”

“Financial governance and transparency is progressing but it is fair to say that it is operating from a lower base. The ongoing development of the capital markets will act as a very good catalyst,” continues Fiddes.

Hopefully, the corporate case studies included in this report go some way to illustrating what is being achieved in the region in response to the many challenges companies are struggling to overcome.

We would like to extend our sincere thanks to all the corporates who responded to this Study and we would, of course, welcome any feedback.

Contents

  • Introduction

  • Executive summary and major findings

  • Respondent profile

  • Treasury priorities

  • Key performance indicators (KPIs)

  • Case study – Majid Al Futtaim

  • Key areas of treasury

  • Case study – Alumco

  • Risk management

  • Supply chain

  • Technology

  • Bank relationships

  • The future

  • Conclusions

To find out more, order your copy of the findings today.