Endesa SA is a Spain-based holding company engaged in the business of electricity and gas generation, distribution and sale, as well as related services.
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The challenge
FX management at Spanish utility Endesa was characterised by time consuming manual processes that meant making one payment could take half an hour.
Witness a typical FX trade. Having received a payment request from the administrative team, treasury would ask the front office to make spot purchases for the payment using Bloomberg’s FXGO. Only when the purchase was completed did treasury see the exchange rate.
Payment processes were just as laborious. Treasury would manually add the exchange rate into their enterprise resource planning (ERP) system. The ERP system generated a physical letter that was downloaded and emailed to the banks which would settle the payment to the third party. The process was further held up because Endesa’s banks needed a call back to confirm payment details before the payment could be executed.
One of the problems was the company’s multibank platform. Linking the platform to third-party payment instructions in an automated process across all banking partners required a series of bespoke changes to the existing payment files to ensure they matched with the FX trade and Endesa did not have the resources to integrate changes for each banking partner.
The solution
Deutsche Bank’s FX4Cash Matching Service gave Endesa the flexibility of trade execution via a multi-bank platform, as well as leading payment capabilities.
Through its new trade matching service, Deutsche Bank can link a cross-currency payment with an FX trade. The new workflow also helps to standardise the process by using the same XML payment files (Pain.001) used for international payments. This means that the payment file does not need any edits or additional references as the bank will match based on currency pair, amount and value date.
“The new process is substantially faster, with payments that used to take 30 minutes now taking only five. It is highly scalable and replicable solution across markets and currencies and is now live in Europe and APAC,” says Francisco Casais Muñoz, Head of Cash Management.
Best practice and innovation
Instead of asking for a bespoke adaptation that would disrupt or change Endesa’s workflow and would not be scalable across other partner banks, Deutsche Bank created a solution that leveraged the existing workflow and available international payment standards.
It means that the payment file does not need any edits or capturing of additional references as Deutsche Bank’s FX4Cash auto-matches trade information from markets infrastructure with payment information from cash management. Deutsche Bank provides a solution that will not only have a tangible impact in terms of driving efficiencies and lowering costs but will also require minimal effort from Endesa to implement.
Owing to the successful implementation, Endesa now plans to implement this best practice solution with all its partner banks.
Key benefits
Cost savings.
Process efficiencies.
Increased automation.
Risk mitigated.
Errors reduced.
Manual intervention reduced.
Future-proof solution.
In addition to providing Endesa with execution flexibility for high-value transactions, the solution can be used to settle an FX trade to a third party – where the payment is authorised from Endesa’s bank account and submitted through any electronic channel – without going through the markets third-party payment process, with due diligence and screenings routinely performed by the bank solution. It can also be used to link a third-party payment to an FX hedge.
Ole Matthiessen
Global Head of Cash Management & Head of Corporate Bank Asia Pacific, Middle East & Africa
It has been a pleasure working with Endesa to help modernise their FX workflow. Through our bespoke Deutsche Bank solution we have been able to deliver increased automation, process efficiency and cost savings for the treasury team yet with minimal implementation effort for Endesa operations – ensuring FX and payment processes are seamlessly connected to allow the company to avoid making any changes to its existing workflow. This elegant solution is a testament to the innovative thinking of our teams at both Deutsche Bank and Endesa as we ensure that high-value payments are now being processed with greater speed, efficiency and accuracy through our strategic solution collaboration.
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