OPG consists of several decentralised entities in Central Europe with substantial operational autonomy in the day-to-day organisation of their businesses.

Problem…

The majority of the group’s turnover is realised in the Czech Republic, Slovakia, Hungary, Germany and Poland. Cash flows are in euro and in local currency. The parent company, which is responsible for the group treasury, is based in Luxembourg.

“We needed to find an efficient single e-banking platform which would allow us to simplify our bank account structure and optimise the cash flows within the group,” says Bruno Bobricheff, Group Treasurer. Local payments and receivables are the responsibility of the local entities so each affiliate needed to have electronic access to bank statements for its own account(s) only and the ability to initiate electronic payments from those accounts only.

Group treasury, meanwhile, wanted to achieve better control and oversight of the different entities’ funds and to maintain electronic access to all accounts centrally in order to achieve greater visibility and security in the enterprise-wide cash position. “We also needed group treasury to be able to initiate payments out of the local accounts. So we were looking for a uniform solution for the group’s entities and one that would support both local and international payment formats,” adds Bobricheff.

In order to concentrate the cash flow and benefit from potential economies of scale, OPG was also looking to set up centralised cash pooling. Bobricheff wanted the structure to run without value date loss and with a maximum level of automation to reduce the numerous manual transfers.

…Solved

Bearing in mind these objectives as well as the group’s geographical footprint, OPG opted for the cash management solution proposed by KBC. A cash management adviser was then appointed to co-ordinate the installation of the solution. A team of specialists in account opening, reporting, e-banking and cash pooling was dedicated to the implementation. In conjunction with this team, OPG was able to establish a staged process for implementing the new system which consisted of reviewing the account structure, rolling out the e-banking solution and setting up the cross-border zero balancing.

The local operational accounts of OPG in Central Europe were screened and reduced. Remaining accounts were moved to KBC and some local third-party banks. Group treasury opened ‘overlay’ accounts with KBC in Belgium, Czech Republic, Slovakia, Hungary, Poland and Germany. The accounts were opened in euro and in local currency as non-resident accounts, with the master accounts being held in Belgium.

“KBC Bank offered a state-of-the-art internet solution, called w1se corporate e-banking,” says Bobricheff. This multi-country, multi-language, e-banking software enables OPG to manage its accounts worldwide. It also allows group treasury in Luxembourg to remit payment and collection instructions and to withdraw intraday and/or end-of-day account information from whichever location. “Group treasury requested that the local entities install w1se so they could also easily and electronically approve all the different payments they initiated,” comments Bobricheff.

Local collections and/or payments are credited /debited on the relevant account with the local KBC or third-party banks in the different countries. OPG opted for a cross-border zero balancing system to a master account (per currency) held at KBC Belgium. The participating accounts are held at CSOB Czech Republic, CSOB Slovakia and K&H Bank Hungary.

OPG’s accounts at Kredyt Bank Poland and at KBC Germany are not yet integrated in the automated cash pool due to limited but growing turnover, but these accounts are also conveniently managed through w1se. “KBC helped OPG to solve its issues in a cost efficient way with its easy to use and very reliable e-banking platform and cash pooling structure, therefore I would strongly recommend my treasury peers to consider these two solutions developed by KBC,” comments Bobricheff.