Perspectives

Bank Interview: Maurice Cleaves, Barclays Corporate

Published: Mar 2011

Since joining Barclays in January 2011, Maurice Cleaves has been focused on developing the bank’s cash management strategy and global footprint. Treasury Today spoke to Maurice about his goals for the coming years and the challenges currently faced by the bank’s corporate clients.

Maurice Cleaves

Global Head of Cash Management

Maurice Cleaves joined from Deutsche Bank, where for the past four years he was responsible for the EMEA region Cash Management Product organisation. During this time he had the responsibility for building and managing an EMEA proposition.

Prior to Deutsche Bank, Maurice was at J.P. Morgan Chase for 26 years, holding positions in Operations, Product and Business Management, Sales, Product Development and Risk Management with the Cash Management, Securities Clearance and Corporate Trust businesses. Maurice has also been a Director of SWIFT UK, CHAPS, APACS and a Director of the UK Payments Council.

How would you describe Barclays existing cash management strategy?

I’ve been at Barclays a month now and the focus has been on defining where Barclays fits in the competitive business of cash management – what we provide for our clients, and where we have opportunity for growth.

Prior to joining Barclays, I worked for Deutsche Bank, and for J.P. Morgan Chase before that. In both of these roles, I was working in the global cash management business and one of the key building blocks of an effective cash management business is the ‘home market’. This is the bedrock on which the cash management business is built, it provides strength and stability within the franchise and a client base of strong relationships. The ‘home markets’ of those banks are clearly different to that of Barclays and each of the banks has a unique ‘home market’.

In the UK, Barclays has a significant presence, with some client relationships which go back over 200 years.

My sense is that outside of the UK, we have pockets of expertise and pockets of influence that we need to bring together. So, part of our global cash management strategy is firstly an investment programme that brings together our countries where our expertise lies and secondly grows out the areas where perhaps we’re under-penetrated.

In doing so, we need to bear in mind that we will need to continue to focus on the UK where our corporate client base is the strongest. The way that we will grow and shape our cash management business will partly be on the basis of where our ‘home market’ is, partly on where our expertise is currently, and partly where we need to follow our clients and grow our geographical footprint.

The balance of these three pieces over the coming months and years will take the Barclays cash management business where it needs to be as a recognised global player.

Because of the changing nature of the banking industry across Europe, and the strength of Barclays rating, there is now a place for Barclays in Europe following on from the success that BarCap has had in certain markets. The banking landscape has changed: banks have exited, merged, or been downgraded. So, where corporate treasurers rely on bank ratings, strength of balance sheet and strength of bank coupled with excellent service, there is definitely a place for us.

We are investing in the business and there has been a major reorganisation in the past year from Barclays Commercial into Barclays Corporate. The senior management has changed, the focus has changed and the level of investment has changed. We are now very much looking to grow, in order to follow our clients to the major locations around the globe, to help them with their global cash management needs.

In doing so, we need to bear in mind that we will need to continue to focus on the UK where our corporate client base is the strongest. The way that we will grow and shape our cash management business will partly be on the basis of where our ‘home market’ is, partly on where our expertise is currently, and partly where we need to follow our clients and grow our geographical footprint.

The balance of these three pieces over the coming months and years will take the Barclays cash management business where it needs to be as a recognised global player.

Because of the changing nature of the banking industry across Europe, and the strength of Barclays rating, there is now a place for Barclays in Europe following on from the success that BarCap has had in certain markets. The banking landscape has changed: banks have exited, merged, or been downgraded. So, where corporate treasurers rely on bank ratings, strength of balance sheet and strength of bank coupled with excellent service, there is definitely a place for us.

We are investing in the business and there has been a major reorganisation in the past year from Barclays Commercial into Barclays Corporate. The senior management has changed, the focus has changed and the level of investment has changed. We are now very much looking to grow, in order to follow our clients to the major locations around the globe, to help them with their global cash management needs.

Which locations in particular are you focusing on?

Our strategy is first and foremost a regional approach.

The first region we are focusing on is Europe. Following years of change in the European cash management space, it’s the right time for Barclays to take advantage of that. We’re not burdened with a legacy structure, which puts us in a good position to build for the new European environment.

We will focus on Germany, where we are probably under-penetrated, compared with some of our competitors. Our aspirations in Germany are that we already have our Barclays Capital business and some very good client connections there. We now need to offer them pan-European cash management capabilities which incorporate the strongest European economy. We’ve opened up the other services of our European operations to our German clients – so we’re already booking substantial business there.

In terms of the second region, we believe that we have a unique proposition in Africa, as a bank with significant in-country banking facilities in many African countries. The African countries were historically a very difficult place to do business, but over time, Barclays has built up a very solid and secure franchise for cash management and trade business there.

Additionally, in some of the African countries, we have a branch network, and therefore a comprehensive delivery capability. We want to bring the power of that to our clients.

I think the third area that we’ve got to focus on is trade flows between the UK and the US. Our clients are very much involved in those trade flows and we therefore need to build out the Barclays franchise in a sensible way in the US.

Of course, with the addition of the Lehman business to Barclays Capital, we have become a fairly significant business in the US and that gives a platform to grow.

Cash Management and Trade are natural extensions of business for these clients and we need to develop a broader relationship to capture these opportunities.

Outside of those three regions, we have other locations around the world where we do business. The next strand of our strategy will be to bring that into a global cash management offering.

Do you have a timetable in mind?

There’s a short, medium and longer term plan. In the short term, we’re growing out what we can in Europe. In the medium term, we’ll be focusing on Africa and the US and in the longer term, the rest of it will come together. So we’re probably looking at one, three and five year horizons respectively.

How are you planning to develop your product offering?

A basic aspect of all business is that you have to offer competitive products and therefore product innovation is key. While we do have product innovation capability in every country in which we operate, our UK business has traditionally been the place where this innovation has been most advanced.

In the UK market, we’ve had some amazing success with some very sharp products, and there is a programme underway to migrate those in simple terms into Western Europe and ultimately to Africa and so on.

These are products that have served our clients’ needs extremely well in the past 12 months, and our European operations have an appetite to bring those products in and expand those onto the European client base. That said, each country does have some unique characteristics and we’re very sensitive to our clients’ needs on a standalone basis in each market.

I think that all global banks are focused on developing their systems environment at the moment, and that’s not dissimilar to what Barclays Corporate is doing.

We’re looking to roll out new platforms, new overlays and new client interfaces, to support them in each of the regions where they want to do business.

What challenges will you face in implementing all of this?

I think most of the challenge is determining just how much you can do in a short space of time. Quite often, these things take time, because they are heavily reliant on systems, stability and robust project management. Any change of the core infrastructure needs to planned and executed really well because very often it is like changing the engine while the car is moving. We will focus on doing the basics well, providing timeliness and transparency of information back to clients in a timely manner and having highly efficient transaction throughput.

What are the key challenges corporate treasurers are facing today?

Corporate treasurers have got a number of challenges today that they didn’t have in the past. They have the challenge of which bank providers they use; the challenge of keeping cash flow consistent within their own company environment; new regulations to follow for their own business and the challenge that some of the sources of cash flow control have changed over the past two or three years. They also have the challenge that some of the banks that in the past they may have wanted to work with, or have worked with, are not the same banks as they are today. So I think that they have a tricky ‘balancing act’ to ensure efficiency and compliance.

Meanwhile, the treasurer is much more visible at Board level than they were before. In the past, they may have been viewed as the guys that made sure that everything knitted together from a supply chain point of view; a job well done was the standard expected. Now, the treasury department has become more visible and has had to be far more innovative. They’re the people who keep the company solvent through the management of liquidity and cash flow and so their position has been elevated in recent times.

In terms of where we fit with that, I think corporate treasurers have become much more demanding of their banks and the services that the banks offer. I also think they require a lot more transparency – for example, over intraday liquidity that they have, or the week-to-week or month-to-month liquidity that they have. They need to have a much closer relationship with their bankers to ensure that there is a like-minded thinking anticipating need on both sides.

The business has become much more complex as clients have diversified or become more international. In theory, it’s great if you can get one bank that can help you with account visibility, control of funds, reconciliation, reporting etc, across multiple jurisdictions. But, the corollary to that is that you don’t want to ‘put all your eggs in one basket’! Clients are more discerning and banks have evolved post crisis. Corporate treasurers look far more closely at counterparty risk and banks are assessed on their ratings and CDS spreads.

Whilst for operational efficiency and simplicity some clients may want to use one bank for all services and operations, diversity is key to managing risk and they are actually spreading that risk across a number of banks and placing cash into rated investment funds. Banks with stronger ratings in weaker countries have benefited from this in their presence countries.

Regulation of banks has forced a segmentation of the types of cash products that they offer. From the banks’ point of view, we have a very different view of the stable operational cash that our clients place with us, from the ‘hot money’ that moves around the market overnight. This encourages more planning from the treasurer to take advantage of this.

What sort of advice are your corporate clients looking for currently?

A lot of the advice they are looking for is around cash and trade flows: what’s the best method? What’s the most secure? How can they move monies around the world to pay for goods and services? How is liquidity made available? What new products and techniques are available to them?

Every bank aspires to take on the role of ‘trusted advisor’ for its clients – not least ourselves. If we feel we’re very much on the same side of the table as our treasurers, in terms of what the contingencies are, what the alternatives are for funding and liquidity, then, increasingly we’re seen as part of a solution by them.

How high on the corporate agenda is forecasting?

Very high, and probably higher than it’s ever been before. Everybody can see what a lack of liquidity can do to any company. It’s the old story: plenty of profitable companies collapse because they haven’t got their liquidity right. Forecasting is about having contingency and alternative.

A lot of the products we design have ranges attached to them – we allow movements on the account; we reward the average balance, rather than forcing clients to deposit tranches for fixed periods. We’ve come up with a very flexible product range to meet contingencies to cover potential forecasting errors.

What developments in the industry do you expect to see over the next 12 months?

Certainly more regulation on liquidity. Obviously, we want all banks to be solvent, but we don’t want solvency to cause restrictions on what we can offer to our clients, so we have to watch that closely.

Another thing to note is that if we really believe we’re coming out of this economic downturn and into a new more expansive economic cycle, businesses will need to take advantage of new markets and the changing world order. Barclays Corporate expects to help clients with those new markets.

In my discussions with treasurers there is a feeling that there is a lot more work to do in the area of corporate governance. We recently spoke to a big high street name client that is saying corporate governance no longer allows them to place funds for longer than overnight. There’s quite a strong development for names that large to say that they can’t commit to more than a single night on any bank.

Corporates are taking the lead in many cases to forge their own strength in governance, implementing new policies to provide clarity of strategy. Some of that would look quite tough to the outside world, but it’s obviously there for a reason. Given what’s happened in the last few years, corporates are making sure they’re on a more stable footing to ensure that they can withstand any future shocks.

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