Photo of Hansjörg Suhner, Evelyne Thommen and Benno Zentriegen, Roche.

With operations in over 150 countries, Roche required a solution which provided cost benefits, efficiency standards and ensured the needs of all internal business partners and affiliates were managed. The initial goal was to increase transparency, standardisation and centralisation of financial processes, while also improving compliance needs and reducing costs. The judges thought this was a truly award-winning example of how to implement an in-house bank.

The challenge

With operations in over 150 countries, Roche desired a centralised treasury set-up which provided cost benefits, efficiency standards and ensured the needs of all internal business partners and affiliates were managed. The initial goal was to increase transparency, standardisation and centralisation of transactional processes, while also improving compliance needs and reducing costs. The solution had to be truly global and flexible to incorporate regional differences as well as changes in the regulatory environment.

“We decided to establish an in-house bank (IHB) and initially concentrated on five key areas: bank relationships, cash pooling, intercompany FX hedging, intercompany settlement tools and harmonising our banking interfaces,” explains Martin Schlageter, Head of Treasury Operations.

The solution

Roche streamlined and implemented these areas between 2004 and 2007, during which time the IHB joined SWIFT for all its treasury payments. A payment factory was then implemented for all subsidiaries around the world, offering the payment-on-behalf-of (POBO) model wherever possible. Additional features have since been developed via SWIFT such as supplier financing, compliance filtering, payroll factory and automated matching and confirmation of treasury transactions (money market, FX and securities).

“Concurrently, we were also focusing on the vision to completely replace Roche’s affiliates’ external banks,” says Schlageter.

Today the IHB serves more than 200 affiliates around the world from Switzerland. It now provides cash pooling in 45 currencies, hedging of FX-exposures through intercompany FX transactions, enables bankfree intercompany payment services as well as ‘on behalf of’ third-party payments and collections. Since 2008, it has centralised all incoming and outgoing interfacing messages with banks via its own SWIFT.

“Now in its tenth year, the IHB has reached a significant milestone: several affiliates were able to close all their third-party bank accounts and rely exclusively upon the IHB for all their banking services (100% IHB). In order to make ‘100% IHB’ possible, the team enhanced its service offering using an electronic banking tool (eIHB) that allows file uploads from non-ERP systems and manual payments (eg taxes and salaries),” explains Schlageter.

Our judging panel felt the Roche team deserved Highly Commended in the Top Treasury Team category as real innovators in the in-house banking space. The close collaboration between the treasury operations team and its IT support group has delivered the strategy in a company the size of Roche. The IHB is exceptional in its comprehensive bank service offerings that now allow affiliates to bank without an external bank account. In its annual survey, Roche’s affiliates rated the services of the IHB an average 9/10. We believe this is a truly awardwinning example of how to implement an IHB.

Richard Parkinson, Managing Director, Treasury Today

The ultimate roadmap was to structure the IHB as a service provider to the affiliates: the IHB will perform all the services that an external bank would normally offer. With the pioneering status of ‘100% IHB’ the team can serve all its affiliates around the world from very restrictive countries, like Pakistan, to (now) ‘bank-free’ countries, like Finland.

In addition to rendering state-of-the-art services to all affiliates around the globe, the IHB Team centrally handles and controls all Roche bank accounts, EMIR and Dodd-Frank reporting, and maintains the infrastructure for internal FX exposure, credit risk and portfolio performance reporting. In the area of core treasury activities, nearly all third-party treasury transactions from deal entry (via online platforms FXAll or 360T) to settlement and confirmations to payment to counterparties are automated. Roche has piloted SAP’s Correspondence Monitor for handling and matching of SWIFT corporate confirmations for FX, money market, and securities. The team currently manages approximately 3,000 treasury transactions and – with an automation rate of 98% – 20,000 IHB transactions a month.

Diagram 1: An innovative global platform for all treasury functions

“Being a centre of excellence and serving as a role model of centralisation within our group, the team is invited to all Roche transactional projects and is perceived as an innovative, reliable business and project partner offering state-of-the-art solutions,” says Schlageter.

In December 2013 Roche received – as one of just two corporates – the approval for RMB cross-border cash pooling and intercompany netting in China which went live in early June 2014.

Best practice and innovation

The two teams managing the IHB comprise 21 dedicated people; with Martin Schlageter, Head of Treasury Operations since 2004, and Alexandra Greiner, Head of Treasury IT since 2006. Together, they formed a dynamic team with a balanced gender mix, representing more than ten nationalities and ages ranging from 20 to 60, coming from a wide array of business, affiliate and IT backgrounds. Besides the people, the guiding force behind the development of the IHB has been the existence of a visionary, long-standing, and finely-tuned roadmap that has remained remarkably consistent since it was first conceived in 2004.

What is particularly noteworthy is the IHB allows Roche to run its comprehensive, global services centralised out of its Basel headquarters with no regional treasury centres required. Another important aspect of its success is the close association between treasury and IT. With this the IHB processes have reached a high level of standardisation and automation which not only grants transparency to group treasury but is absolutely key to continuous innovation.