Cash & Liquidity Management

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Cost Savings, Audit Trail, Best Execution and STP at Lufthansa Group Treasury Our treasury department is separated into two main teams - one team is responsible for Risk, Liquidity and Asset Management and the other team for Cash Management. Both teams currently consist of five employees.Last year the Risk Management Team handled a volume of Û16.86bn (4,968 transactions) in FX, Û1.151bn (24 transactions)in interest rate transactions and nearly 4 bn of Lufthansa´s liquidity as well as 3.7 bn in the Lufthansa Pension funds.

Cost Savings, Audit Trail, Best Execution and STP at Lufthansa Group Treasury

TMI discusses the impact of e-trading and STP within the treasury team with Roland Kern, Head of Treasury at Deutsche Lufthansa AG

Roland Kern has been Head of Treasury of Lufthansa German Airlines since August 2006. Previously, he was Director of Risk Management Services at Deutsche Bank, consulting large corporates as well as the public sector in risk analysis and risk management organisation. Prior to this, Roland Kern worked as Senior Product Manager and Regional Head of Sales for Deutsche Bank in Germany, Belgium, Spain and the United States.

Would you give us an overview of the structure and trading activity at Lufthansa Group Treasury?

Our treasury department is separated into two main teams - one team is responsible for Risk, Liquidity and Asset Management and the other team for Cash Management. Both teams currently consist of five employees. Last year the Risk Management Team handled a volume of €16.86bn (4,968 transactions) in FX, €1.151bn (24 transactions) in interest rate transactions and nearly 4 bn of Lufthansa´s liquidity as well as 3.7 bn in the Lufthansa Pension funds.

In 2004, the financial management at Lufthansa Group was analysed and methodically reappraised in a project called ‘Lufthansa Finance Cockpit’. This took into account the diverse requirements of risk management, balance sheet disclosures, corporate credit standing and value management, giving our treasury department and especially our trading lifecycle the highest level of automation and transparency.

Can you give us a brief description of your automated trading process?

As shown in Figure 1, we have realised a real end-to-end IT infrastructure at Lufthansa Group Treasury and we have upgraded the control of financial risk. This was largely achieved by optimising risk analysis and the implementation of risk management throughout the whole LH group.

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