Recent research suggests that senior treasury and finance experts in Asia in particular are supportive of increased regionalisation. Almost half (49%) of the respondents to HSBC’s ‘Redefining Treasury in Asia’ report favoured increased regionalisation through regional treasury centres supporting group treasury, with a further 7% saying they had no plans to centralise in the near future.

According to Patrick Zhu, Head of Global Banking Corporate Sales, Asia Pacific for global payments solutions, the most important driver of regionalisation in Asia is operational complexity.

“Having an in-region central treasury team allows a global company to manage treasury operations at a more granular level in accordance with local regulatory nuances and respond quickly to regulatory changes,” he says.

In addition, treasury teams in Asia are frequently in the vanguard of digital transformation, which often leads to broader change across the global organisation. “Lastly, the tilt towards regionalisation reflects local treasury talents’ ambition and increased capability to take up more and bigger responsibilities,” adds Zhu.

In its latest annual report, Tata International noted that it had established a global physical cash pooling regional treasury centre in Singapore. This model consolidates temporary surplus bank balances from various tax-friendly geographies – including the US, UK, Hong Kong, UAE and Singapore – across divisions and is multicurrency.

By centralising these funds in Singapore, the company says it ensures optimal utilisation and management of its financial resources, reducing the need to finance debt.

There is also support for a hybrid approach where respect is given to the value of local capability and knowledge and recognition that regionalisation places treasury closer to local markets, which helps them to understand regulations and add value by adopting best practices and ensuring regulatory compliance.

A report published last summer by DBS revealed that more than 40% of treasury and finance leaders from companies based in the US and Europe as well as Asia were relocating or planning to relocate their Asian regional treasury centre, with availability of talent and access to new markets among the most important considerations.

Banking infrastructure and services – as well as local customs and the regulatory environment – can be quite challenging, especially in some of the developing markets. Being close to the market and having close dialogue with the banks in the region is often key to a treasurer’s ability to find relevant solutions and generally navigate market specifics.

That is the view of Inga Kudzmaite, Treasury and Tax Director Asia at Carlsberg Group, who says that the establishment of treasury centres is driven by a broader need and a business case such as proximity to business operations to provide support, regional financing opportunities and potential related benefits, and tax advantages.

“Geopolitics plays an important role in considering where the treasury centre is or should be located but based on my experience, establishment of a treasury centre is not defined by a single factor but is a rather complex process where different risks and opportunities are balanced into the optimal outcome for the specific business,” she says.

Carlsberg’s regional treasury centre in Asia is located in Hong Kong. A single employee overlooks all its markets in the region with local treasury staff in each market running domestic operations.

“The treasury centre has one primary purpose and that is to support business needs locally and create efficiencies as well as control treasury operations and comply with group policies and guidelines,” observes Kudzmaite. “It brings a certain coherence between market, region and group.”

The Siemens Treasury Americas team is headquartered in New Jersey but operates as a fully regional and virtual team, with members strategically located across the Americas. Most of its approximately 50 employees are based in based in New Jersey but there are additional team members in Buenos Aires, Lima, Mexico City, Bogota and São Paulo.

“The Americas region plays an important role in Siemens’ treasury operations, particularly as we are responsible for the US – which accounts for approximately 30% of global revenue,” explains Nicola Bates, President and CEO of Siemens Capital.

The regional treasury centre serves as a hub of innovation and operational excellence, maintaining close proximity to the business units it serves.

“This proximity, combined with our team’s local market knowledge and cultural diversity, positions us perfectly to address market needs, foster collaboration and pilot initiatives that can scale globally,” says Bates.

One example of this is the company’s ongoing cash management transformation project, which is simplifying and centralising its treasury operations by consolidating over 60 physical bank accounts into a streamlined virtual account management structure.

Each legal entity operates through dedicated virtual accounts, enabling payment-on-behalf-of and collection-on-behalf-of processes and eliminating the need for manual cash pooling and improving real-time visibility into balances and transactions via open banking APIs.

“We are implementing an in-house AI-backed tool to automate cash application directly into our ERP systems, improving accuracy and achieving automation levels of over 80%,” says Bates. “Additionally, we are integrating blockchain deposit accounts to enable 24/7 cross-border payments and global liquidity pooling, creating an ‘always-on’ treasury infrastructure that ensures real-time settlement even beyond local banking cut-off times.”

On completion, Siemens expects the project to reduce internal management efforts for bank accounts by 70% and enable it to halve its bank fees.

The company continuously monitors its treasury operations through analysis of real-time data, performance metrics and regular feedback loops.

“Open banking APIs, a centralised virtual bank account structure and real-time reporting provides ongoing visibility into our cash positions and transaction flows, ensuring we can identify and address inefficiencies promptly,” adds Bates. “By regularly assessing our systems and workflows, we uncover opportunities to drive optimisation and scalability.”

A key question for any multinational considering establishing a regional treasury centre is the value of being closer to local banks and suppliers.

This can enable companies to streamline processes, rationalise bank accounts and negotiate lower fees suggests co-founder of corporate financial specialist Dukes & King, Lisa Dukes.

The treasury centre has one primary purpose and that is to support business needs locally and create efficiencies as well as control treasury operations and comply with group policies and guidelines. It brings a certain coherence between market, region and group.

Inga Kudzmaite, Treasury and Tax Director Asia, Carlsberg Group

“A more obvious benefit is the ability to offer better support for operations across different time zones,” she adds. “This real-time service capability can enhance the efficiency of local operations and ensure that treasury functions are aligned with the needs of the business and also feel part of the team.”

Other benefits include enhanced liquidity outcomes, more efficient working capital management and lower AP/AR management and execution costs according to research conducted by business banking market research and analysis firm East & Partners.

“Local tax planning and advisory expertise, ‘connectedness’ with regulatory authorities and deeper knowledge of their industry sector are key attributes,” says the firm’s Global Head of Markets Analysis, Martin Smith.

In terms of talent, regional treasury centres can attract skilled professionals who are familiar with the local market and regulatory environment, which is crucial for effective treasury operations and can lead to better decision making and strategic planning.

“Regional treasury centre employees are more likely to be aware of the local culture and speak the language, which can result in improved communication with regional stakeholders,” says Joanne Koopman, Manager at treasury consultancy Zanders.

The use of regional treasury centres has particular benefits where there are large time zone differences with local teams having the benefit of aligning with the whole of a business day in their region as well as being more aligned to payment cut-offs.

“If head office relied on non-treasury professionals to support local treasury tasks in multiple locations, this could be consolidated into a professional regional treasury function improving accuracy, consistency and compliance,” says Colin Evans, Managing Director of Elite Treasury Services. “Regional treasury teams act as an extension to the head office function, deepening local relationships, helping to solve technical issues and improving access to local products, funding and services.”

Being closer to local banks and suppliers will enhance relationships agrees Simon Kaptijn, Director, Transaction Services Cash Advisory & Structuring at ING Wholesale Banking.

“The ability to meet face-to-face will build longer lasting, stronger ties that may result in improved buying power and better terms and conditions,” he says. “In cases of market expansion, local knowledge will provide benefits when entering new markets.”

The increased digitisation of regional banks and advances in banking technology have made it easier for companies to establish regional treasury centres, or at least removed some of the previous barriers to establishing or maintaining such centres in certain markets.

The driver for establishing regional treasury centres is to mobilise cash across time zones, allowing local operations to be supported while global liquidity is optimised. This includes leveraging local, lower cost payment channels and minimising the need to move money across currencies.

That is the view of Bob Stark, Global Head of Enablement at Kyriba, who observes that digitisation of regional banks simplifies the automation of treasury and payment processes, increasing the flexibility of a single treasury centre to support multiple countries within a given region.

“Governments opening trading channels and improving tax incentives for businesses operating in their country can increase the likelihood that treasury considers establishing operations in a region,” he says.

Data from Citi’s proprietary treasury benchmarking service suggests that most clients prefer the model of a globally centralised treasury with regionally distributed treasury operations observes Stephen Randall, the bank’s Global Head of Liquidity Management Services, who says it can be valuable to have treasury staff closer to key business hubs to stay on top of changing business and financial conditions.

“We may see a US-headquartered company putting a regional treasury centre in Switzerland or centralising its Asia banking and liquidity cash pool in Singapore, for example,” he says. “We are seeing an increasing number of clients operating like this across borders, enabled by digital platforms.”

Regional treasury centres may benefit large corporations with multi-country operations when housed in the right hubs to support local nuances, while acting as a strong link with the centralised treasury function at a group level agrees Priyanka Rath, Global Product Executive, Liquidity and Account Solutions at J.P. Morgan Payments.

“Being closer to local operations can improve cash flow management by allowing for more accurate forecasting and quicker responses to cash needs,” she says. “Decentralising treasury operations can also enhance business continuity and resilience by spreading operational risk across multiple locations.”

Centralised treasury operations require a high degree of maturity in ERP systems and bank connectivity, along with clear guidelines for managing global bank relationships and a robust corporate governance framework that clearly defines the roles and responsibilities between subsidiaries and HQ finance teams.

They also necessitate a banking partner capable of providing a ‘follow-the-sun’ liquidity management solution. Eventually, cash centralisation may allow for higher cash returns, while anti-fraud and cybersecurity efforts can be reinforced if managed centrally.

However, some organisations may not be ready to adopt this level of centralisation or may prefer strong regional banks instead of global banks – particularly if their activities are spread across several continents acknowledges Philippe Penichou, Global Head of Sales, Wholesale Payments & Cash Management at Société Générale.

“In such cases, a middle ground solution could involve regionalising treasury operations,” he says. “A perfect example for this kind of optimisation is the regional centre that a large North American group with operations in 50 countries decided to implement for seven of its European subsidiaries. Combining cash concentration and virtual accounts, the treasury team was able to rationalise its operations, cutting the number of banks and reducing its working capital financing needs.”