Automating treasury at Heidelberger Druckmaschinen

by Florian Schräder, Jasmin Hartmann and Marcus Holschuh Corporate Treasury, Front Office, Heidelberger Druckmaschinen AG

Florian Schräder, Jasmin Hartmann and Marcus Holschuh Corporate Treasury, Front Office, at Heidelberg-based Heidelberger Druckmaschinen AG talk about automation and e-trading in their group-wide treasury operation with TMI Magazine.

A few years ago you decided to further integrate and automate your treasury operations with a view to providing improved STP for your group treasury business. What factors played a role in that decision?

At Heidelberger Druckmaschinen AG, we are working on a continuous streamlining of treasury process integration and automation. Our aim is to run a lean operation with high levels of efficiency and low risk. Having achieved this to a great extent by fine tuning our SAP treasury management solution CFM, we were then looking to leverage STP by executing and capturing most of our daily flow business in electronic format. Since Q4 2004, we have been trading electronically, via 360T’s Multibank Portal TEX®. Executed trades on 360T have been seamlessly processed into CFM in real-time since early 2005.

Does centralisation play a role in your treasury organisation and, if so, how can this be reflected by your e-strategy?

We started centralising our treasury operations in 1998. The benefits from it are clear cut, ranging from scale and netting effects in our group’s interaction with relationship banks, to a real-time consolidated cash position and quality assurance via a centralised service and advisory function, to name only a few. With it comes the role of the group treasury as an in-house bank for hedge and funding requests from our global subsidiaries.

In 2005 we successfully installed 360T’s intra-group trading platform I-TEX® to our frequently trading subsidiaries and provided to them a professional FX and Money Market trading service under the HEIDELBERG name and logo.

You said you chose to also trade electronically with your subsidiaries. What prompted that choice, how exactly does this work and where are the key benefits for your company?

Our key driver for selecting 360T’s internal trading platform was to automate our intra-group treasury trading activities through standardised communication with our subsidiaries.

Together with establishing an in-house bank, we configured each individual subsidiary with a set of rules that represent our company treasury policies. The possibility to net individual subsidiary exposures (FX or liquidity) within the group is ideal since this greatly reduces the necessity to trade externally. One of the biggest benefits of 360T’s internal trading solution is that apart from the manual intervention, the platform has an autodealer that allows group treasury to provide prices to subsidiaries 24 hours, even when there are no traders present at the headquarters. For a global company like Heidelberger Druck, that issue is very important. To achieve the real time efficiency on the operative level is very important, so that all transactions (internal and external), conducted through the platform, are automatically exported into our SAP treasury management system without re-keying.

What instruments are you commonly trading online?

Externally, we are e-trading plain vanilla FX products, including Spot, Forward/Outright and Swaps. We also do the majority of our MM transactions online. Our main subsidiaries execute all their plain vanilla FX requests, inter-company loans and deposits electronically with us.

Overall we have identified the following key benefits of I-TEX® for Heidelberger Druckmaschinen:

• Time, risk and cost reduction through high process efficiency

• Documentation & real-time STP of hedge accounts compliant to FAS 133 and IAS 39

• Replacement of market information systems on group level

• 24hr availability and support across all time zones