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Best in Class Treasury Solution in Latin America/Caribbean Highly Commended: Roche

Published: Jul 2019

 

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Photo of Zampeta Fameli, Roche and Peter Cunningham, Citi.

Martin Schlageter

Head of Treasury Operations

Zampeta Fameli

Cash Manager

Switzerland

Founded in 1896, Switzerland-headquartered Roche is the world’s largest biotech company. It employs over 94,000 people across more than 100 countries. In 2018 it spent CHF11bn on R&D annually and posted group sales of CHF56.8bn. It is the world’s largest biotech company.

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Centralisation can still be inclusive for local operations: Roche’s treasury exemplifies this in Latin America

The challenge

A key aspect of Roche’s business model includes taking risks in pharmaceuticals, healthcare and research, as part of the strategy to grow and evolve. To counterbalance this, treasury’s role is to safeguard the balance sheet by hedging against financial risks and therefore facilitate that risk-taking activity in the business.

Roche has one global treasury operations team in Switzerland, with responsibilities that include the Americas, and a strongly centralised approach.

As Roche embarked on its centralisation project in treasury, in all instances, it was critical to win local support for centralisation. In Latin America, the shared service centre had been responsible for many treasury functions, including FX. When Roche’s central treasury decided to use the same ERP technology as the business, Roche sought to explain the multiple benefits treasury would be able to deliver to local businesses by eliminating many local treasury functions, including payments, FX, and liquidity management.

Of Roche’s 300 legal entities, 54 fully-fledged subsidiaries now bank entirely through the central treasury. Although this is not possible in Latin America for regulatory reasons, this vision shapes Roche’s approach to the region.

The solution

Rather than focusing on what cannot be centralised, Roche has concentrated its efforts on achievable goals. For example, while local currency cash pooling is impossible in much of Latin America, it is possible to centralise all payments and bank statement processing using the SWIFT network.

Roche takes an incremental approach to achieve additional benefits. Having centralised all payments in Latin America, it added compliance filtering using new data generated by payments. This makes it easier to demonstrate compliance to auditors where previously compliance-related information was held across multiple country systems and was difficult to collate.

Best practice and innovation

While taking account of local regulations and conditions, Roche always looks at treasury policy from a global perspective. The company is happy to sacrifice some perceived efficiency benefits at a local level in Latin America, in favour of the most effective standardised strategy at a global level. Implementing this policy can be difficult, which is why it has been so important for treasury to be able to deliver benefits for multiple parts of the organisation and build alliances.

In 2018, Roche expanded the scope of the global IT shared service centre it established in Costa Rica in 2017 and moved finance and procurement functions from Sao Paulo. With this expansion in role, Roche Americas’ SSC is able to service these areas for the company’s subsidiaries throughout the continent.

Across the group, the use of in-house bank accounts for all entities allows Roche’s main distribution entities to make inter-company payments without concern for convertibility of any individual currency. It is irrelevant for distribution sites whether they sell goods to Brazil in Brazilian real because all currencies are convertible within Roche’s in-house bank. In this instance, treasury settles Brazilian real in USD using the offshore non-deliverable forward market.

For every stage of its centralisation journey, implementation is phased to facilitate fine tuning. And treasury always ensures there is senior support for its centralisation initiatives to overcome local resistance, maintain disciplined project management and look for additional opportunities to increase automation and efficiency.

Key benefits

  • Centralisation keeps local operations in the loop.
  • All payments and bank statement processing centralised using MT940.
  • Inter-company payments possible with no currency convertibility issues.

 

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