Trade & Supply Chain

Global Cash Management

Published: Oct 2013
Talking Treasury Forum group photo
With a still-challenging global economic environment, corporates are firmly focused on cash visibility and access. Are corporates finding it easier to attain the desired level of cash visibility, or is there something they need to do in order to get to the next level? How can banks help their clients navigate these challenges and, importantly, are they living up to the corporates’ expectations?

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Portrait of Steve Everett, Global Head of Cash Management, RBS

Steve Everett

Global Head of Cash Management
RBS logo
Portrait of Michal Kawski, Head of Treasury, Gazprom

Michal Kawski

Head of Treasury
Portrait of James Marshall, Assistant Group Treasurer, Virgin Media

James Marshall

Assistant Group Treasurer
Portrait of John Murray, EMEA Corporate and Public Sector Cash Sales Head, Treasury and Trade Solutions, Citi

John Murray

EMEA Corporate and Public Sector Cash Sales Head, Treasury and Trade Solutions
Citi logo
Portrait of Neil Peacock, Global Head of Cash Management, ABB

Neil Peacock

Global Head of Cash Management
ABB logo
Portrait of Filipe Simão, Head of Client Advisory, BNP Cash Management, BNP Paribas

Filipe Simão

Head of Client Advisory, BNP Cash Management
BNP Paribas logo


Portrait of Joy Macknight, Editorial Director, Treasury Today

Joy Macknight

Editorial Director
Treasury Today logo

Joy Macknight (Treasury Today): The global economic climate remains challenging and many banks are still facing ratings issues. How is the overall economic state-of-play impacting corporate cash management?

Neil Peacock (ABB): To a certain extent the most recent developments are not having much of an impact, when put into the context of the past five years. Since 2007/8, the focus has been on ensuring that we have visibility and control – effectively centralising as much of our cash as possible to ensure it is available. Having visibility over cash in Egypt, Cyprus or Greece is one thing, but being able to use it is another.

In more restrictive countries in terms of moving cash in and out, such as China, India and Malaysia, we try to minimise risk by knowing where the cash is and how we can access it. These are the key drivers for cash management today – the immediate impact of recent events is not influencing us to do things differently to what we have been doing for the past three or four years.

Joy Macknight (Treasury Today): Does that resonate with the other corporates in the room?

Michal Kawski (GM&T): Yes absolutely, I agree with that. Fundamentally nothing has changed in terms of the methodologies and tools we are using. However, recent events inside the Eurozone, or the situation in Egypt for example, are interesting signs of the times. In the Eurozone, we are centralising our euro liquidity into one place, just in case another euro crisis erupts at some point. The Single Euro Payments Area (SEPA) project gave us the opportunity to further optimise our euro liquidity.

James Marshall (Virgin Media): From a consumer-based corporate perspective – and a slight aside from treasury – we are keeping an eye on rising costs, which will impact customers’ ability to carry on subscribing to our products. Home connectivity and entertainment is no longer regarded as discretionary for many families, as it has proven to be of greater value compared with other activities, but nevertheless consumers’ incomes are being squeezed.

Virgin Media’s business is based in the UK and in sterling, but much of our capital expenditure (capex) is used to import equipment. Over the past few years we have seen more demands placed on us in terms of trade finance solutions and letters of credit (LCs), for example, which we have not had to deal with before; but this is perhaps symptomatic of a period of international fiscal uncertainty.

John Murray (Citi): It is important to look at liquidity from a global standpoint, as opposed to solely from a European perspective. By concentrating funds in various currencies in a single location, clients are now challenging their banks to come up with creative solutions, particularly in trapped markets such as China and Russia. They are asking their banks how they can do more to get trapped cash out of these markets and concentrated into a single location.

Steve Everett (RBS): China is at an interesting stage, as it opens up further with renminbi (RMB) internationalisation. However, it is important to remember some of the lessons from other countries in the past, particularly in terms of trapped cash, and think about what could or couldn’t happen in China if a slowdown emerges.

Portrait of Filipe Simão, Head of Client Advisory, BNP Cash Management, BNP Paribas
Filipe Simão, BNP Paribas

Filipe Simão (BNP Paribas): Interestingly, the Chinese word for crisis includes both danger and opportunity – and our customers are increasingly asking for greater flexibility, a word that I will stress. It is flexibility that will ensure that the company remains agile to either postpone opportunities or take advantage of them. Importantly, flexibility is key in the way in which liquidity structures are implemented, electronic banking (e-banking) solutions are chosen and SEPA XML is leveraged.

Neil Peacock (ABB): Although we have said a lot about China, we also need to consider the emerging markets, particularly in Latin America, such as Brazil, Argentina and Venezuela. We had quite high hopes for these countries, both in terms of cash generation and being able to access that cash. But we have seen some worrying signs: economic slowdown, increased controls and inflation. I think you are right, Steve, that we mustn’t forget that if things aren’t resolved in the short term to everyone’s satisfaction, things can change back the other way quite quickly. But I am quite positive about China.

Steve Everett (RBS): Going back two years ago, we were constantly answering questions about the euro and what should people be doing, particularly US clients. However this has abated and we now hear minimal concerns around the Eurozone. Whilst there are lingering problems and occasionally new issues crop up, people are broadly content with what they need to do and feel that they are in control. I agree that it is very much an emerging markets issue now.

Joy Macknight (Treasury Today): Are corporates finding it easier to attain the desired level of cash visibility, or is there something you need to do/have in order to get to the next level?

Neil Peacock (ABB): ABB experienced a crisis in 2002, which forced it to put in place clear, accurate cash forecasting because without that it would not have had support from its banks. So for any company that is thinking about implementing a cash forecasting process, I can recommend having a crisis because there is nothing like it to focus the mind. ABB is now in the position where what was put in place ten years ago is still extremely effective today. Having good visibility and control over cash definitely helped us during the 2008 financial crisis. But it is not one of those things that you put in place and then sit back. It’s continually evolving and as markets open up, technology improves and new structures and products become available to be able to centralise cash, then we need to be ready to take advantage of those developments.

James Marshall (Virgin Media): I agree with the sentiment that a crisis galvanises action to generate better cash forecasting. Due to the financial crisis, and to a certain extent our shareholders support for share buybacks, we have been able to drive down our cash balances. We can now manage cash at a much lower level as a result of better forecasting.

Portrait of Michal Kawski, Head of Treasury, Gazprom
Michal Kawski, GM&T

Michal Kawski (GM&T): GM&T’s formal treasury activities were set up in the summer of 2008, so you really can’t think of a better time for setting up a treasury function. This whole situation allows us to build a high profile within the organisation. But it’s not only crises that give us this opportunity. Energy or commodity trading is a volatile business today, so without good cash flow forecasting and building provisions against volatility, we wouldn’t be able to operate.

Joy Macknight (Treasury Today): There has been a lot of press about corporates holding record levels of cash, yet due to Basel III short-term deposits are not so attractive for banks. Where are corporates placing their cash?

Steve Everett (RBS): There are two dynamics at play here. Firstly, banks need to balance their balance sheets, only taking deposits providing we can lend them out. Currently we have excess cash and if we cannot use it, we need to review our pricing in line with the cost of holding the excess liquidity.

Secondly, Basel III regulations introducing liquidity coverage ratios mean certain deposit types will be fairly punitive to hold. As a result banks will face substantial costs for traditional short-term time deposits, eg those under one month. That will have a knock-on impact on our clients. We have already started thinking about our product propositions and pricing, but the unintended consequences for corporates will put a question mark over where they will be able to place this short-term cash.

John Murray (Citi): I agree with you. I would add, from a banking perspective, it is important that we still support our clients and provide a safe, secure environment where they can leave their funds with a counterparty that they trust. Clients are not necessarily always chasing yield, but because the environment has improved they are starting to seek additional incremental basis points.

Filipe Simão (BNP Paribas): Although Basel III gives us some leeway in reaching those famous liquidity coverage ratio (LCR) levels, many banks want to achieve the ratios ahead of schedule. Therefore, banks are very keen to accept corporate deposits because they are considered more stable than wholesale deposits. As you mentioned John, we see a growing attraction for yield, but counterparty risk is still very important. When you see market turmoil such as recently when the Portuguese stock exchange lost 5% or the events in Egypt, these remind us that risk is still important, be it sovereign or bank risk.

Michal Kawski (GM&T): What we learned in 2008 was that there can be counterparty risk on the banking side, which was a major change in the treasurer’s paradigm. Before that, depositing money with an institution that was rated much higher than you was a no-brainer. Since then companies began building up their own investment policy, spreading risk across different institutions and products. This is when money market funds (MMFs) took off because everyone realised that suddenly something which is AAA rated one day could be BBB rated the next, even large European financial institutions.

GM&T now has a wider credit risk assessment policy and has diversified its portfolio across many banks and products, which is similar to other corporates. An interesting question is what will happen to the MMF industry? This will be an interesting debate over the next year or so.

Neil Peacock (ABB): I would just like to add that one alternative is to invest your cash in acquisitions. Could you achieve a better return by acquiring companies and developing your business, which makes sense economically, rather than getting three basis points on a short-term deposit?

From our point of view, it does make sense and we have been very acquisitive. Over two years ago, we had €10 billion in cash and no yield. If you are a shareholder, is that good enough? No. Can you get a better return by acquiring companies in different markets, such as China or North America? Those are some of the decisions that need to be looked at from a strategic business standpoint.

James Marshall (Virgin Media): From a governance perspective, we have an audit committee who provides oversight to many of the company’s financial operations, one responsibility of which is to look at our treasury and credit risk policies. Interestingly, their attention has been focused mainly on the products, ratings, funds, security and plans, rather than yield.

To your point Neil, our cash has been used to invest in the business and as a result we were not as leveraged as we could be. We have gone through a deleveraging process over the past few years with the support of our shareholders. But this was a different approach compared with pre-2008.

Joy Macknight (Treasury Today): In the year of SEPA implementation, as we head towards the deadline of 1st February 2014, what challenges still remain and what is your estimation of corporate readiness?

John Murray (Citi): SEPA is proving to be a challenge for corporates throughout 2013. Our main priority is to ensure that our clients have the support they need to become compliant. If you look at the rate of uptake of SEPA Credit Transfers (SCTs), as of August it is about 42%; whereas the rate of uptake of SEPA Direct Debits (SDDs) is only about 2.5%. This illustrates the readiness of the market. A particular challenge, therefore, for corporates is to be ready for SDDs. From a payments perspective, you will still be able to send wires; but the concern will be one of confidentiality should you need to make payroll payments. We are focused on ensuring that our clients are aware of the challenges, the benefits, and the risk of doing nothing – what will happen after 1st February 2014?

Neil Peacock (ABB): At the beginning, treasury and shared services were the only ones involved in SEPA compliance. And then someone said ‘What about payroll? What about HR?’ There was a realisation that getting the other business units involved is quite important – what if we aren’t able to pay our employees on time?

Portrait of John Murray, EMEA Corporate and Public Sector Cash Sales Head, Treasury and Trade Solutions, Citi
John Murray, Citi

John Murray (Citi): Additionally, are your customers ready? Will you actually receive your receipts? And if you don’t, what impact will it have on your business? Payments is a network business and any network is only as good as its weakest node.

Michal Kawski (GM&T): When operating in a number of European countries, you realise that there are plenty of local regulations behind SDDs, which effectively means a slightly different SEPA wherever you go. SDDs may be relatively straightforward in the Netherlands, for example, but in Germany written consent is required from some counterparties, on top of technical challenges and a massive bureaucratic hurdle. We actually started our SDD project with a conference call with one of our banks just to discuss the situation country-by-country. Therefore, I can understand why SDD projects are still behind schedule. We are still not fully migrated but are on track for the deadline.

Filipe Simão (BNP Paribas): We are not too concerned with SCT readiness. The migration rate is relatively high, banks are reachable and clients can easily find software solutions for converting file formats and International Bank Account Numbers (IBANs). However, on the collections side, SDD still has a very low migration rate and the migration effort required can be significant. In most countries, the SDD creditor-driven mandate flow works in the opposite way to the legacy direct debit. One piece of advice is for clients to talk to their IT vendors and banks who have in-depth migration expertise. Either way, action is to be taken now. As we get closer to the end-date, the resources available on the market will become scarce and expensive. Corporates should not assume that the deadline will be pushed back. The regulators in all European countries are committed to maintaining the end-date at 1st February 2014.

Clearly the focus today is regulatory, which is correct. There will be plenty of time to look at leveraging SEPA opportunities next year. This will include cross-border direct debits, payment factories and payments-on-behalf-of (POBO).

Neil Peacock (ABB): Certainly we have taken a country-by-country approach because there are different levels of SEPA readiness. Finland, for example, has been 100% compliant for over a year now and we are using them as a role model, setting them up as the SEPA experts and using them as the consultants for the rest of the group. But we used SEPA not just to be compliant from a regulatory perspective, but actually to drive a pan-European cash management project.

Joy Macknight (Treasury Today): Do you think that corporates will be able to carry the momentum through and leverage the benefits post-deadline?

Neil Peacock (ABB): As long as treasurers start thinking about the rest of 2014 and ensuring that they have a budget available then yes they can do it. But they need to be clear as to what they want to achieve. We are trying to take advantage of the benefits that SEPA will bring in terms of bank account and bank rationalisation, as well as payment processes standardisation. Not doing that now seems like a missed opportunity and a duplication of work.

John Murray (Citi): I agree that it is potentially a missed opportunity, but I think that at the moment corporates are primarily focused on being compliant and will then focus on embracing the opportunity to reduce their bank accounts to maybe one or two per country or even one across the whole of the Eurozone. Our clients are starting to consider the longer-term benefits as we talk to them about the opportunities that SEPA can bring.

Michal Kawski (GM&T): The SEPA topic can be split into two aspects: credits and debits. We addressed the credits side more than two years ago. From the costing perspective, generating those payments is cheaper, which is a fantastic step forward. Debits, on the other hand, are a different story but I agree that there are many areas where corporates can improve their existing cash management structures, such as centralising collections in one bank and having just one account, for example, based in London.

Neil Peacock (ABB): One of the frustrations I have is the lack of harmonisation within Europe from a tax payment standpoint. So it would be great to have one central bank account, but I will still need to have a bank account in Italy, Portugal and France, for example, in order to make certain types of payments or collections.

Joy Macknight (Treasury Today): What challenges remain in terms of setting up POBO and collections-on-behalf-of (COBO) structures?

Filipe Simão (BNP Paribas): At BNP Paribas, we have seen corporates doing POBOs since 2003, so well before SEPA. The difference is that at the time companies were doing POBO only for cross-border payments or for payments in non-functional currencies. The way the accounting implications work are thus well known and implemented. Globally, the difficulty with POBO is to make sure that the debtor information reaches the beneficiary and that they are able to match it, otherwise the invoice will remain open. Additionally, in some countries such as Poland, it is not possible to make payments through a POBO model. It may also trigger regulatory reporting issues when used on non-resident accounts for some payments. But clearly POBO is something which has been at the heart of the in-house banking (IHB) solutions since the turn of the century; SEPA just makes it much easier.

Portrait of James Marshall, Assistant Group Treasurer, Virgin Media
James Marshall, Virgin Media

James Marshall (Virgin Media): Because of the structure of Virgin Media, POBO is something we have always struggled with. For example, we still need to split out Virgin Mobile from Virgin Media for all employees and capex payables, but the difficulty has always been that if one shared service centre (SSC) is processing bills there is complexity in having them all paid out from the correct entity, which adds to the confusion.

John Murray (Citi): I think technology will be the enabler of POBO – having one ERP system will help facilitate POBO. Having one single instance, with all entities on the same system, will make life a lot easier for the IHB in terms of managing inter-company lending.

Neil Peacock (ABB): The technology is there and corporates need to understand what is available. On the back side of POBO and COBO is the virtual accounts set-up. This is where COBO really makes sense because you can have a million virtual bank accounts and allocate one to each of your customers and business units – it makes the reconciliation process a lot easier. Then you don’t necessarily need a single ERP solution, as you can split MT940s based on the virtual account set-up. And if we can do it in Europe, then why not on a global scale?

Filipe Simão (BNP Paribas): Still on the technology front, corporates have started developing XML to do their mandatory technical migration to SCTs, and then discovered that they can leverage the same formats to make payments in other currencies. So XML is not just for SEPA.

Joy Macknight (Treasury Today): Regulations are coming thick and fast; some have a direct impact on corporates and some indirect. How are these new regulations expected to change the treasurer’s behaviour and how can banks help their clients best prepare for what is coming down the line?

Steve Everett (RBS): The ultimate knock-on impact for corporates with regards to all of the new regulation is the amount of internal change it means for the banks. A large proportion of every bank’s investment budget is now being spent on these regulatory projects, which intuitively must have a knock-on impact in terms of the discretionary value-added spend that we would normally make. As a result innovation in new services and products is either being reduced or is delivered slower than in the past. This problem is the same for all banks.

John Murray (Citi): Banks spend lot of time reviewing and understanding the implications of local regulations to ensure they are aware of how these will impact their business and their clients in all the markets in which they operate. To help our clients, Citi has a knowledge of regulation not just within the Eurozone or North America, but in all the countries where we operate. This helps us to understand the local challenges. So as corporates do business around the world and seek guidance, we have people with local knowledge and experience to help them through the regulatory challenges.

Neil Peacock (ABB): Corporates are a little bit like water – we always find the path of least resistance. If an obstacle is put in its way, the water finds a way round it. For example, after the financial crisis, when bank funding dried up, the bond markets became much more active. Similarly, if the Financial Transaction Tax (FTT) ever gets imposed, corporates will just deal where it is not implemented.

Filipe Simão (BNP Paribas): The discussions on the FTT are still ongoing, with many banks, officials and economists voicing their concerns as to the dramatic implications if it is implemented as currently proposed by the European Commission (EC).

Michal Kawski (GM&T): All the regulations we’ve been talking about will impact what we do: Basel affects the funding side of our operations; FTT affects our transactions and the financial products we use; and the European Market Infrastructure Regulation (EMIR) will affect the derivatives side. EMIR has been at the top of our agenda for the past 24 months at least. I know there has been a lot of debate within the treasury industry around what it actually means for corporates. Suddenly companies could be forced to make a choice: are they going to invest money in acquisitions or support the liquidity of a derivative portfolio?

Of course, given the latest rules recently put in place, this is probably of less relevance. However, there remain reporting requirements, which is a fairly new workload for treasurers. A number of my peers have told me that they are not sure about the formats and exactly what they are supposed to be reporting. They have to report positions from the past 18 months, so it means plenty of new challenges and much IT effort as well.

Joy Macknight (Treasury Today): Many corporates are looking to alternative sources of funding. What are the corporates in the room doing?

James Marshall (Virgin Media): Virgin Media had been on a deleveraging path until the Liberty Global merger and we had begun discussions around how to improving working capital with the senior executive team. This year was the first that our senior executives have working capital metrics included in their bonus calculations. The purpose of this was to enable the company to carry on its deleveraging path. The next set of discussions are focusing on supply chain finance (SCF) and other routes to reaping more working capital benefits. Liberty wholeheartedly supports this initiative and is actively pursuing this programme across Europe.

Michal Kawski (GM&T): In terms of alternative sources of funding, I’ve been observing the development of the retail bond market. There were a number of successful issuances in the London markets, and I also heard about a retail bond issuance in Poland a few months ago where the biggest refinery in Poland issued its bonds and they were sold out in two days – generating a few hundred million zloty. This concept seems to be attracting a new group of investors.

Filipe Simão (BNP Paribas): We see a growing interest in terms of public bonds and private placements as a way for small and medium-sized enterprises (SMEs) to get mid-term financing. We are also teaming up with a treasurers association to see how we can help SMEs tap the commercial paper markets. Obviously these are instruments that are more associated with companies which are publically rated, but an increasing number of SMEs are interested.

Michal Kawski (GM&T): That’s interesting because the message we normally receive about the private placement market is that it is long term, for example pension funds.

Filipe Simão (BNP Paribas): They tend to be long term, but we start looking at these types of products for maturities of three years.

Joy Macknight (Treasury Today): Is there a tighter integration happening with cash management and trade finance, and if so, how does that help with cash forecasting?

Michal Kawski (GM&T): I can’t even imagine trade finance and treasury working separately in our environment. We have trade finance facilities which involve both issuing letters of credit (LCs) and a funding element, so they are tightly aligned and reporting is done together.

Portrait of Steve Everett, Global Head of Cash Management, RBS
Steve Everett, RBS

Steve Everett (RBS): That is interesting Michal, because we have regularly put trade people in front of cash people and the general reaction is ‘that would be a nice to have’. I think it comes down to the industry you operate in. Personally I find it surprising that cash and trade are still not coming together as there has to be an opportunity around the use of liquidity, supply chain financing and forecasting across the two product sets.

Filipe Simão (BNP Paribas): It depends on the industry, but also geography – cash and trade are more integrated in Asia, but more piecemeal in Europe.

Neil Peacock (ABB): We have two distinct departments and actually sit on different floors, but have become closer together in the last year or so through working on shared projects such as SCF or advanced trade payable finance. We are also working together on reducing the number of bank accounts and banks, as well as centralising and standardising the issuance of guarantees. This is exactly what we are trying to do on the cash management side as well.

John Murray (Citi): At Citi we are constantly seeking innovative ways to further integrate cash and trade, particularly in the purchase-to-pay space, and specifically with regards to enabling our clients to leverage their invoices and pay suppliers.

Neil Peacock (ABB): Adding to John’s point, at ABB the purchase-to-pay is part of a different function, in a different building. It is part of the shared accounting services, which is part of finance and controlling. However, in some of the projects we are involved in we are working much closer with them, as well as with order-to-cash.

Michal Kawski (GM&T): Reducing the number of bank accounts is an interesting challenge for us at the moment. Each time we set up a trade finance facility with a bank, we need to open bank accounts for four entities. So if you multiply that by another five facilities, then the number of bank accounts increases significantly. An interesting challenge would be to work with our banks on rationalising the number of bank accounts and thinking about the structures which would allow a simplification. I know that there are difficulties in doing this, as there are many legal constraints that would block this process, but it would be an interesting challenge to take on.

Joy Macknight (Treasury Today): Obviously what is happening in the market place is placing some strain on the corporate-to-bank relationship, but how are banks living up to the corporates’ expectations and what could they be doing better?

James Marshall (Virgin Media): Virgin Media has been through a period of leveraging up and back down again, but in all fairness our relationships with our banks have always been very constructive. We have looked to do a lot of business with our lending banks and that has been an important part of our approach. One thing that has been interesting, certainly since 2008, is that we are now having more conversations with banks that maybe wouldn’t have been interested in offering us transaction services before, but are now very keen to have that discussion. To a certain extent, we are always happy to chat if it promotes further competition and new ideas in the marketplace.

Steve Everett (RBS): But equally, providing that the core lenders can provide the services and the stability of systems, probably 95 times out of 100 corporates are sticking with the banks they know. A good two-way commitment is crucial, and it is very difficult to gain new clients if you are not in the relationship as a primary lender.

John Murray (Citi): James made a very good point – since the financial crisis, a number of new banks have entered transaction services because they see the benefits of having a long-term relationship with the client and supporting them on a day-to-day basis. Maintaining the bank account provides an opportunity to offer new solutions and services to a client. If you have that account you are able to have a deeper dialogue and more knowledge of the client’s needs and subsequently identify new solutions that the client could benefit from. From a bank perspective, it is important to understand the client’s needs, to listen and to identify how the bank can help the client achieve its objectives. I think banks are getting better at that.

Joy Macknight (Treasury Today): Do the corporates in the room agree with John?

Neil Peacock (ABB): Yes, I actually think it is a great time to be in a corporate in transaction services because I think there are maybe ten to a dozen banks that are world class in terms of cash management. Since the crisis much more investment has been put into transaction services and there are some very good people involved. Many corporates will stay with their incumbent provider because switching would only deliver an incremental – not a dramatic – improvement in the products and service level. If you are with one of those dozen, you are going to get good service, products and support – and I think we are quite lucky in that respect.

We have been through some very detailed RFPs in Europe and the US in the past six months, and to a certain extent it wouldn’t have mattered which bank we chose because they would all have done a good job. It is really about choosing between the one with rainbow sprinkles and an extra cherry, or the one with chocolate and fudge. We are quite lucky, and the financial crisis actually helped that a bit because banks moved away from investment and equity trading and placed more emphasis on its transaction banking business.

Filipe Simão (BNP Paribas): Do you see a difference between these ten to 12 world class cash management banks or is global transaction banking a commodity? Are there other subsets within the commodity, such as value-added services, flexibility or a long-term relationship commitment, that corporates perceive as differentiators?

Neil Peacock (ABB): They aren’t all equal, just slightly different flavours. We looked at nine different categories and 37 different sub-categories, including ratings, service, structure, technology and capability. Geographic reach was also an important criteria – if we have a requirement for a bank account in Italy for collection purposes, does the bank have a full branch service in the country, or is it a rep office, or do they use a partner bank? But this is small stuff compared with the big picture.

James Marshall (Virgin Media): As a consumer business, through our RFPs we evaluate the whole customer experience. From start to finish the customer experience has to be outstanding. Today our bank review meetings are not about problems, but what new technology might look like, for example mobile payments (m-payments). A number of our banks have been invited to make presentations on banking technology to help us get slightly ahead of the curve. We want to make sure that if customers want to pay us via tablets and phones for example, then we have the ability to receive their money in whatever way makes sense for them.

Neil Peacock (ABB): James, you hit upon a pertinent point, which comes back to Filipe’s question as well, what is the best fit for the underlying business? If you require m-payments then you might choose the leading bank in m-payments. We make the same decisions: in the US, for example, we were offered one solution that was fantastic, but it didn’t fit the business requirements as closely as the one that wasn’t quite as good. So we went with the solution that was the best fit for our business.

In addition, we are looking for a long-term commitment – not just two or three years, as I don’t think we will continue to do RFPs every two or three years, but more like six or seven years. Therefore, we are also looking at the bank’s long-term ambitions and its creditworthiness as well.

Michal Kawski (GM&T): We have a centralised treasury function with global business operations, so it has been quite challenging to find a bank or banks that are able to support this. We wanted a bank that really understands our business – and how it is different to other businesses – and which is proactive enough to address our needs. During the RFP process we learned that some banks have a centralised approach to providing cash management services globally, whereas others are more decentralised. After the process we were absolutely convinced that the solution we decided on was a good choice and fitted well with our business.

Joy Macknight (Treasury Today): And the final question, what are your predictions for hot topics in 2014?

Steve Everett (RBS): The beginning of 2014 is going to be all about SEPA, whether we like it or not. The industry will be trying to cope with preparing for last minute readiness or dealing with the fallout of issues that people hadn’t fully thought through. The rest of the year will see a lot of the other regulations coming closer to live dates – Basel III, Dodd-Frank – and as a result I’m afraid there won’t be much in the way of new developments happening, as most banks and corporates remain focused on keeping their businesses on the road.

Michal Kawski (GM&T): I agree that regulations will dominate the agenda, unless things heat up in the political sphere. The unwinding of quantitative easing (QE) at some point might prove to be an interesting challenge for all of us, but it is more likely to be regulatory changes in 2014.

John Murray (Citi): I fully agree in terms of regulations, especially SEPA. Additionally, I think that corporates should be exploring what they can do with technology and how they can leverage it to become more efficient. An example here is SAP’s Financial Services Network (FSN) and what that will enable in terms of connectivity, security and file format translation.

Portrait of Neil Peacock, Global Head of Cash Management, ABB
Neil Peacock, ABB

Neil Peacock (ABB): I will be well into our euro cash concentration project by the start of 2014, so this will be taking up most of my time. We will continue to focus on regulation – we have to be compliant and take advantage of compliance and the change it brings as well. It is pretty boring really and that is a good thing – more of the same.

Filipe Simão (BNP Paribas): You don’t need a crystal ball to see that the main topic until early 2014 will be SEPA. But looking a bit beyond the SEPA end-date, we see interesting developments on the retail side, such as e-wallets, mobile acquiring – which will dramatically lower the entry barriers for small merchants – and tablet usage in corporate treasuries. A few of these solutions are already out there, offered by software vendors, payment providers and banks. Inevitably some will fail and some will thrive.

James Marshall (Virgin Media): When I gaze into my crystal ball, my challenge is to change from being a UK-centric cash manager into one that is part of a pan-European operation. Therefore I think it is going to be about the systems for us, to demonstrate a fit with our Liberty colleagues. This is something that we can take a lead on, as well as it being an interesting project for a treasurer to get involved with. The UK treasury team will not shoulder the burden of refinancing because this will be done by Liberty, so we can now turn our attention to supporting the business. Every time treasury assists the UK business, we add value through different payment types and modifying the business methodology.

Joy Macknight (Treasury Today): Many thanks to you all for participating.

Thanks again to our participants

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