It is fair to say the treasury function at Shamal had not kept pace with the company’s rapid growth. The division needed updating into a scalable operating model that integrated policies, frameworks and performance measures run by a larger team using automated processes rather than manual execution, which had constrained capacity and efficiency hitherto, Group Treasurer Sleiman El Homsi tells Treasury Today in an interview from the company’s Dubai headquarters. El Homsi joined last year after Shamal’s management gave the green light to establish a professional, dedicated treasury function that included an IHB covering cash pooling, payment factory and virtual accounts.
“POBO and COBO (payables-on-behalf-of and collections-on-behalf-of) were set to one side given maturity constraints in the UAE banking landscape,” recalls El Homsi.
El Homsi’s first tasks included updating the company’s treasury policies to reflect the new strategic direction and he engaged a consultancy to support with the short-term capacity uplift. Meanwhile, additional hires boosted numbers in the front, middle, and back office to ensure continuity, and reduce integration risk.
Next, the team began the process of choosing and integrating a TMS to strengthen resilience and provide the scalability required to support the treasury function’s anticipated growth in volume and complexity as the company grew. El Homsi conducted a return-on-investment (ROI), for a TMS that included analysis of current and future business requirements to ensure a future-proof system selection.
“The TMS scope covered cash and liquidity; money market, debt and investment instruments, in-house banking, bank account reconciliation and management and hedge accounting and reporting,” he lists.
In addition to ensuring the right functional and technical fit, the TMS choice was based on vendor credentials, including the implementation team’s expertise and availability. “The success of any TMS enablement is tied to solution delivery,” reflects El Homsi. “We developed detailed demo scripts and put particular emphasis on the quality of the demo and user interface to ensure staff were comfortable with the chosen system.” In the end, the team selected FIS’s cloud solution, Integrity, and added Bloomberg as the market data and trading platform to the technology stack to automate and drive transparent and competitively priced deals.
Treasury in action
As the new treasury team began to flex, it collaborated with other teams. For example, in collaboration with Financial Planning & Analysis, a five-year cash forecast was developed and a funding plan agreed to broaden liquidity access and ensure long-term financial sustainability. This exercise was managed alongside two cash management requests for proposals (RFPs) that rationalised banking relationships, services, and accounts across both domestic and international verticals, marrying financing support with pricing and quality of ancillary banking services for a more comprehensive and competitive bank selection process.
“Positive outcomes included lower transaction fees, a new interest-bearing scheme covering a wider set of accounts and utilising virtual accounts to ease the reconciliation of collections,” says El Homsi.
In parallel, the team developed interest rate and FX hedging strategy frameworks to identify, quantify and define appropriate risk responses, ensuring a monitoring and feedback loop to support exposures managed within treasury’s risk appetite.
The centralisation process also led to the creation of a treasury special purpose vehicle (SPV) which (in a tax-efficient jurisdiction like Dubai) acts as the domestic vertical’s IHB. It required formalising an internal cash agreement to comply with transfer pricing in line with the IHB framework plus a synthetic credit rating to price intercompany loans at arm’s length. Credit risk models were developed following both S&P’s and Moody’s methodologies.
“A separate IHB entity, characterised as ‘agent/coordinator,’ was set up to cover the international vertical, further centralising funds overseas, after assessing withholding tax implications on cross-border movements based on the nature of funds remitted like dividends, loan interest, royalties and management fees,” he says.
Next, Swift connectivity for statements and payments was rolled out across ten banking relationships as a main channel of integration with the IHB. The team also set up a new host-to-host connection with a newly selected primary banker selected as a secondary channel. Online banking and transaction access was enabled across remaining banks as a tertiary channel – important for banks that can’t accommodate MT101s.
“To help with tracking of intercompany transactions, ZBA pooling was activated to consolidate group funds for more efficient liquidity management after we completed bank account rationalisation and the TMS go-live.”
El Homsi concludes the company’s transition to the IHB model was ultimately realised in record time in a transformation that ushered in multiple value adds spanning cash visibility and liquidity, spread advantages on deposits, accelerated release of escrow funds, plus operational efficiencies from the TMS and deeper strategic partnerships collaborating across debt, liquidity, financial risk management, and transfer pricing.
