Whitbread is a FTSE-listed British multinational hotel and restaurant company headquartered in Houghton Regis, England. Its largest division is currently Premier Inn, the biggest hotel brand in the UK with over 850 hotels and 85,000 rooms across the UK and Ireland. Premier Inn also has a presence in Germany (59 hotels and over 10,000 rooms). Whitbread’s other brands include the restaurant chains Beefeater, Brewers Fayre and Table Table.
The challenge
For a treasury manager wanting to earn a return from short-term cash like Whitbread’s Stuart Fitzsimmons, finding an investment that offers low risk but comparable returns to a conventional bank deposit or money market funds (MMFs) was challenging. Not anymore.
The company has long sought to minimise risk and optimise returns in diversified investments on its cash that didn’t trip regulatory lines or its strict treasury policies and provided it with ample liquidity. But the only options available seemed to be depositing cash with its relationship banks or utilising MMFs.
The quantum of the Whitbread’s surplus cash balance and concerns about potential future money market fund regulation led the treasury team to look for alternative investment options.
Enter TreasurySpring, a fintech offering corporate treasurers the chance to lend surplus balances to banks on a secured basis and for a comparable return to conventional bank deposits. The platform also allows businesses to access highly rated banks on an unsecured basis, across multiple jurisdictions – it is possible to access government and government agency risk.
The solution
The repo market, where organisations borrow and lend money, taking assets as security in case of default, has always been the preserve of banks and large asset managers. Ordinary companies seeking to lend their cash surplus (in this case, a reverse repo) employing other than bank deposits or money market funds have always been excluded from the market.
Doing a repo requires a huge amount of legal and financial infrastructure in place including commercial relationships, legal agreements, collateral schedules, tri-party infrastructure, and middle and back office reporting systems, to name just a few.
But last year Whitbread used TreasurySpring’s unique cash platform to access lending opportunities that would have otherwise not been open to it. This platform facilitates access to over 80 counterparties through a streamlined onboarding and KYC process. Counterparties on the platform looking for short-term funds include top-tier banks, governments and government agencies, and even high investment-grade corporates. Whitbread has been able to access reverse repo for the first time ever, enhancing security and reducing risk in its investment strategy compared to placing unsecured deposits.
Not only this, but the same has been the case for investments in non-secured paper issued by non-financial counterparties such as sovereigns, SSAs or corporates – doing so is typically time consuming and challenging, but TreasurySpring’s platform changes all that.
Moreover, the platform allows Whitbread to easily ladder its maturities, meaning the team can manage the company’s liquidity on a granular level and avoid holding onto cash overnight if they don’t need to, lending it out for a low risk return instead. Whitbread can effectively manage its cash, optimise returns and navigate regulatory uncertainties with confidence.
“We are very pleased and excited to receive an Adam Smith Award. We are also grateful to the team at TreasurySpring for their help and advice in implementing the solution: it was very much a joint effort.”
Stuart Fitzsimmons, Treasury Manager
Best practice and innovation
Whitbread’s adoption of the cash platform demonstrates best practice, forward-thinking and innovation in its cash management. The team’s decision to embrace the technology reflects the company’s commitment to cutting-edge technology and financial solutions that optimise cash management practices, driving value for their organisation.
TreasurySpring’s provision of reverse-repo products, is a game-changer for corporates like Whitbread. In the past, establishing this sort of connectivity was prohibitive because of the lack of financial infrastructure but now the company has immediate access to top-tier cash products with the best risk-adjusted returns, enabling the company to tap a wider depth and breadth of products.
With very little administrative burden and a short implementation period Whitbread has transformed its overall cash strategy. Accessing reverse repo, amongst other short-term cash products on the platform, has allowed the company to hold onto its traditional Security Liquidity Yield (SLY) methodology that underscores its cash management strategy.
Key benefits
Process efficiencies.
Risk mitigated.
Improved visibility.
Opportunity to connect with vast number of high-quality counterparties.
Manual intervention reduced.
Future-proof solution.
Exceptional implementation (budget/time).
Improved key performance indicator (KPI) metrics.
The Adam Smith Awards are the industry benchmark for best practice and innovation in corporate treasury. The 2024 awards attracted 389 nominations. To find out more please visit treasurytoday.com/adam-smith-awards
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