The challenge:

With over 30 years of industry experience, CTCI Corporation has established itself with a strong presence in the major markets including China, Southeast Asia, India, America and the Middle East. Based in Taiwan, the CTCI Group has over the years formed a global network of subsidiaries that needs a banking partner to support their complex project cycles which range from the initial phase of bidding for a new project and execution of that project, all the way through to covering the post-project warranty period.

Although the business was seeking key commercial support for its trading activities from this partner, it also sought further involvement in financing the operation. But as an astute business, it was also mindful of the pricing of the relationship as it embarked on it setting-up of a provident financial operating model. As Jeff Aicheng Ho, Senior General Manager, Finance, CTCI, explains: “In addition, to get a bank’s support for bond issuance, cost was also an important consideration faced by CTCI.”

The solution:

As part of the process of re-invigorating its financial model, international bank guarantees were issued by CTCI’s local bank in Taiwan. The solution incorporated a bid bond, advance payment bond, performance bond, retention bond and warranty bonds. This was done in support of the company’s new projects but the arrangement also serves to free up working capital through banker’s guarantees. “For instance, our bank issues a retention bond to substitute the cash trapped in the project” explains Ho.

Furthermore, CTCI implemented the bank’s regional e-banking platform, enabling them to remotely manage cash in the most efficient manner. With this platform, the business can easily make outward remittances and be automatically notified by the bank when the inward remittance occurs. Ho comments: “We are able to freely extract any reports via the DBS IDEAL platform to obtain information on transaction activities including foreign exchange contracts and mark-to-market reports.” He adds that in this arrangement, CTCI’s finance team sitting in Taiwan can authorise any transactions submitted by overseas subsidiaries and obtain visibility of funds as part of a centralised treasury management model.

Best practice and innovation:

The company worked with DBS to set-up a financial operating model of centralised treasury management alongside a couple of transaction banking solutions – including a payroll account programme to CTCI Singapore (facilitating its monthly payroll payments), and a notional pooling structure in order to optimise the interest return. It was also able to gain more interest by focusing on the major operational currencies (USD, RMB, and TWD) and partnering with its core bank for collections and payments.

Ho concludes: “We’re very satisfied and pleased with our banks’ services and would like to see the same level of excellence in customer service and support moving forward. We’re proud of having a good partner bank as it has played a strategic role in helping us expand our business outside of Taiwan.”