Treasury Practice

Problem Solved: Timothy Leung, Fresenius Medical Care

Published: Nov 2006

Fresenius’s Asia Pacific operation was in dire need of revamping its existing corporate structure, which included centralising and harmonising its processes. Through db-direct internet, the company cut the number of manual processes, paving the way for a more efficient and effective control over account balances and cash movements.

Timothy Leung

Senior Manager, Corporate Finance

Fresenius Medical Care (FMC) is the world’s largest provider of products and services for individuals with chronic kidney failure. The company, which is listed on both the Frankfurt and New York stock exchanges, operates a network of over 2,000 dialysis clinics in North America, Europe, Latin America and Asia Pacific and provides dialysis treatment to more than 161,000 patients worldwide. It is also the world’s largest provider of dialysis products, such as hemodialysis machines, dialysers and related products.

Problem…

FMC has a fast growing presence in Asia Pacific with production facilities in Japan and Australia and a large network of after-sales, clinical training and patient care services in 13 countries/regions. The business of the Asia Pacific region is co-ordinated by the regional headquarters in Hong Kong. FMC’s corporate finance and treasury function is largely centralised in the company’s global headquarters in Germany, as Timothy Leung, Senior Manager of the company’s finance and controlling department in Asia Pacific explains: “The Group treasury department in Germany co-ordinates the relationship with banks and advises on the matters of cash and risk management on a strategic level. We have the functions of regional co-ordination, with regard to data analysis and management reporting, and we provide immediate advice to subsidiaries in areas such as financing, hedging and tax planning.”

Under the existing corporate structure, daily banking activities remained decentralised in the region, which relied heavily on manual processes. Local subsidiaries in the region were supported by numerous local banks and their different systems. In order to centralise and to harmonise processes, FMC decided to establish one key banking relationship in the region, which would also offer the company a single online banking platform.

…Solved

Timothy Leung and FMC turned to Deutsche Bank. “Our company has a strong German background and FMC had a long-standing relationship with Deutsche Bank even before we came to Asia Pacific,” explains Leung. “So strategically Deutsche Bank was already our partner. It seemed reasonable that, having entered Asia Pacific, we should also bring in this partner to help us with our business development. Deutsche Bank has a very long history here in this region and full network coverage. And Deutsche Bank has also developed an excellent electronic banking platform, db-direct internet, which really helped us to streamline our workflow.”

Through the adoption of db-direct internet, FMC reduced the number of manual processes and ensured a more efficient and effective control over account balances and cash movements. db-direct internet also presented FMC with more flexibility in the company’s internal approval processes. Senior management staff who are travelling or based outside the region are now able to authorise transactions from anywhere in the world without having to delegate authority to local staff.

The implementation of the platform, country by country throughout Asia Pacific, went smoothly, according to Leung: “db-direct internet is a very user friendly system and it was not an issue to implement it from a technical point of view. The implementation processes were smooth, because we have a very supportive Deutsche Bank team here in Hong Kong, which provided us with training and also took care of the documentation.”

The selection of Deutsche Bank offers FMC many other benefits in addition to the online banking system, according to Leung. “The business relationship in Germany is a critical factor. When local subsidiaries in Asia Pacific send funds back to Germany it makes more sense to use the banking services of the same bank rather than different banks. Deutsche Bank also supports us by providing valuable advice on financing and legal structures in the case of a new acquisition or when we want to establish a new entity. The bank will also share with us their knowledge on local regulatory requirements and approval procedures, when we are going to enter into emerging markets, in which we have no physical presence and where we are not quite familiar with the business environment of that particular country.”

He concludes: “Deutsche Bank’s local experience and their network in Asia Pacific together with the electronic banking platform really give us a complete business solution.”

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