Treasury Today Country Profiles in association with Citi
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October 2008

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A game of survival

We are living in extraordinary financial times as the credit crunch gives way to a liquidity/solvency banking crisis which is draining the financial lifeblood out of the global banking system. Even the older financial commentators have never seen anything like this.

Will we ever see business as usual again? Not for a long time. The difficulties will be felt in local economies all around the world. With money markets frozen as a direct result of banks reducing or eliminating the credit lines they extend to each other, the banks are in self-fulfilling crisis. They show no inclination to help each other out – yet that is what must happen if confidence is to return. Meanwhile it is a game of survival, which is only being won by extensive government intervention in various forms.

Confidence will return but only once enough people believe that the financial institutions left standing are the strong beasts, the survivors, or are ‘too big to fail’ – which means judged by one government or another as an essential part of their bit of the financial system.

So what should a treasurer do?

This is the question on everyone’s mind and the reality is that apart from the obvious actions, no-one really knows. The immediate and obvious points are all about protecting the company’s assets and establishing whether sources of credit are threatened and alternatives are needed.

Cash and working capital management are as essential as ever and spending plans may have to be cut back, with the consequential impact that this will have on the economy as other companies do the same.

The next task is to establish the impact of the crisis on the markets you serve and those that supply you:

  • Ascertain what difficulties and disruption you face.

  • Develop contingency plans now.

  • Review all supplier and customer relationships, particularly the larger exposures.

  • Evaluate all banking and counterparty relationships, concentrating first on major exposures.

  • Diversify and spread risk where appropriate and where practical and possible.

  • Monitor and manage off other exposures.

This is a time when there is no monopoly on good ideas. Our role at Treasury Today is to search out comments and suggestions regardless of where they come from. In this edition we have a number of useful articles. Just as importantly, next month we will be publishing a ‘crisis special’ in which we will concentrate on the problems we are facing.

Recovery of the financial infrastructure is going to be a long, slow process. At Treasury Today we will do what we can to help our readers through the crisis and facilitate the exchange of good ideas. So we would like to hear your comments and suggestions – please email them to or call Rebecca on +44 130 462 9014.