Corporate Finance

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Beyond Treasury: A Service Provider to the Business The authors describe the developments in their approach to treasury since their 2007 article in TMI, including an itemisation of the key enablers for the success of the treasury optimisation and an outline of future plans.

Beyond Treasury: A Service Provider to the Business

by Martin Schlageter, Head of Treasury Operations, and Alexandra Greiner, Head of Treasury Systems, F. Hoffmann-La Roche Ltd

In July 2007 (issue 158) Martin Schlageter and Alexandra Greiner wrote an article in TMI describing Roche’s approach to developing a global treasury organisation, with close collaboration between treasury and IT. Since then, Roche has successfully optimised many of its treasury processes and developed its in-house bank into a payment factory, which is now in the final stages of rollout. In this article, having achieved a world-class treasury operation, Martin and Alexandra discuss how they have now extended treasury’s activities further across the business, beyond treasury.

Roche’s corporate treasury organisation comprises bank relationship management, financing, cash, interest rate and FX management. In addition, Treasury also provides in-house banking and bank communication services to its subsidiaries. Our treasury mission at Roche is that treasury should be a service provider to the business, effectively providing all the services that an external bank could offer, but by leveraging a single SAP platform, and therefore being able to achieve a high degree of integration, it is our aim to be the preferred partner for our subsidiaries. To achieve this objective, we have a highly centralised treasury organisation, based in Basel.

In 2004, we first started to realise our objective to offer a wider range of banking services to our subsidiaries with the rollout of an in-house bank and optimised treasury processes. Since then, we have rationalised our bank relationships and reduced the total number of bank accounts, implemented cash pooling and in-house banking for intercompany FX-hedging and payments and established a central, global bank communication platform based on SWIFTNet. Standardisation is a key objective for Roche, so we were an early adopter of SEPA payment instruments, and we work with our banks to achieve a similar degree of standardisation not only regionally but on a global basis. This has enabled us to build a payment factory with global reach, and we are now in the final stages of implementation.

Enablers of success

There have been a few key enablers for the success of this treasury optimisation initiative:

Firstly, establishing a global cash pool with a header account in the Netherlands, which is the backbone of our in-house bank. This provides us with the internal mechanism to manage our cash effectively externally, whilst meeting the needs of our subsidiaries.

Secondly, rationalising our banking partners to three or four global cash management banks reduces fragmentation of cash, enables us to minimise bank accounts and allows us to achieve economies of scale.

Finally, a vital enabler has been, and remains, the close collaboration between treasury and IT. Working in tandem has meant that we can achieve the automation and standardisation that we require, but also integrate data and processes seamlessly across the business, which is an essential feature of the service we are able to provide.

Roche bio

Developing our service provision

Having achieved a high degree of centralisation, automation and standardisation, we have sought to find ways to leverage our infrastructure further, and deliver an enhanced level of service to the business. For example, by using SWIFTNet as a single bank communication channel, business units no longer have to maintain their own banking interfaces. Most importantly, we have built a reputation for delivering a reliable and professional service to our business units, and increasingly, therefore, we find that they come to us for assistance with both operational and strategic initiatives.

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