Treasury structure using POBO/COBO to implement an advanced centralisation set-up for Siemens AG Group/Financing Division for the region Middle East
As a strategic Regional Financial Centre (RFC) for the Middle East, one of Siemens Capital Middle East’s (SCME) core objectives remains furthering the vision of Siemens Global Treasury to act as a centre of expertise for treasury governance and compliance, payment transactions, managing cash and financial risk, use of in-house treasury tools and streamlining group funding, liquidity and interest management.
In addition to delivering streamlined solutions to address treasury requirements, the scope involved a detailed feasibility study to confirm the ability to run an on-behalf-of (POBO/COBO) scheme for the Middle East. Streamlining the liquidity across various entities spread across various Middle Eastern countries was another challenge in a highly regulated region.
A multi-pronged approach leveraged on the strategically established RFC, implementing first of its kind solutions to address centralisation objectives. Streamlining flows and reconciliation through globally standardised processes and automation, benefits SCME in terms of ensuring smooth and efficient working of the RFC and realisation of its objectives.
In September 2019, Siemens established a regional financing centre (RFC) to provide wholesale in-house banking (IHB) services to Siemens subsidiaries in the Middle East. The new centre, its fifth RFC globally, operates as Siemens Capital Middle East Ltd (SCME), incorporated in Abu Dhabi Global Markets (ADGM). This is a newly established strategic Financial Free Zone in Abu Dhabi that competes with leading treasury hubs across the globe like London and Singapore in terms of governing laws, facilities and ease of doing business. SCME’s aim is to leverage on the RFC structure to implement an advanced centralisation POBO/COBO set-up for Siemens AG Group/ Financing Division in Germany and for the Middle East region.
The shift of expertise and knowledge base at group treasury in Germany to the new RFC in the UAE has given more transparency and proximity to the market dynamics of the Middle East region. Currency accounts and transactions are held at country level with full access to domestic clearing capabilities, allowing for a much more efficient treasury operational management approach. Sitting within the same time zone and working hours are other main benefits of the aforementioned solutions.
Best practice and innovation
Implementing first to market solutions in a historically complex and challenging regulatory atmosphere requires a detailed understanding of the business model and the ability and willingness to go the extra mile to validate solutions before they are implemented.
The detailed feasibility study conducted for on-behalf-of structures, driven from ADGM and innovative cash concentration arrangements, together with strong capabilities for their technical integration and support demonstrates the conviction required by corporates and their partners to set new benchmarks for what is possible with the right partnerships. This was all established against a complex regulatory environment and the topic was untested in the region.