Photo of Ong Ken Yong, Yinson Holdings Berhad and Priya Kini, HSBC.

Yinson transforms its treasury with Malaysia’s first and largest ever sustainability-linked Sukuk in 2021

The challenge

Traditionally, Yinson relied on paper-based and over-the-counter payments processes as well as file-upload in different countries for some of its banking payments. Dealing with multiple banks meant different technology, channels and formats – leading to complex, inefficient and costly processes. Time had to be spent on cumbersome, manual reconciliation processes leading to an increased risk of error and operational inefficiencies. This resulted in yet more resource hours to obtain its cash position across all markets.

As the business continued to grow internationally, Yinson’s treasury team was looking to streamline these processes to fit with the company’s overall goal to digitalise, collaborate, co-source and improve connectivity between all offices and assets.

The solution

Yinson turned to its international banking partner, HSBC and with its corporate treasury based in Malaysia, worked with the bank to set up SWIFTNet FileAct across eight markets (Malaysia, Hong Kong, Singapore, India, New Zealand, United Kingdom, Netherlands, Brazil and Italy) in order to drive operational efficiencies. The company also simplified five cash concentration structures into a single interest enhancement solution without any commingling of funds or physical movement.

Using HSBCnet, Yinson has access to a consolidated end-of-day data file across all markets. Payment processing via SWIFTNet FileAct also achieves straight through processing for enhanced operational efficiency. By having SWIFT MT940, Yinson can offer full visibility and standardised formats across the entire group.

Yinson also worked with HSBC to establish its sustainability-linked financing framework. Being the first-in-the-market ESG Islamic structured product in Malaysia, the bank offered MYR200m sustainability-linked financing for Yinson as an energy solutions provider. HSBC also acted as the sole adviser and arranger for Yinson’s MYR1bn five-year sustainability-linked Sukuk, which represented Malaysia’s first and largest ever sustainability-linked Sukuk in 2021.

Best practice and innovation

Yinson successfully realised their treasury transformation goal by automating and streamlining local and international banking processes for greater operational efficiency.

SWIFT FileAct connectivity and MT940 helps the company manage their business model with real-time visibility, payables capability and access to cash balances in multiple currencies.

In addition, Yinson requested that there be no physical movement of funds for its cash concentration. By implementing a profit-bearing current account and an interest-bearing current account, the company can earn interest on excess funds without physical sweeping. (Note: the profit-bearing current sccount applies to only Amanah/Islamic accounts in Malaysia.)

With the interest enhancement facility, Yinson is further able to increase visibility on total balance positions across its various entities while also improving interest conditions with preferential rates. The addition of a liquidity management portal helps the treasury team improve liquidity management to strengthen and simplify decision making and planning for the future.

In the global shift towards a low-carbon economy, sustainability-linked financing is also critical to helping Yinson strengthen its ESG practices.

Key benefits

• Cost savings of approximately US$72,000 per year.
• Increased operational efficiencies.
• Improved visibility.
• Eliminated the need to maintain multiple banking platforms for full automation and straight-through-processing as well as increased data integrity.
• Generated income on approximately 20% of cash balances, which then translated into achieving KPIs.

“With increased operational efficiencies across nine countries by migrating payments to SWIFTNet FileAct, we have eliminated the need for manual intervention,” explains Ong Ken Yong, General Manager.