Published: January 01, 2000
With widespread confidence in economic growth in Germany and the knock-on effect across other parts of Europe, this is an exciting time for treasurers in the region. However, despite the return to growth and confidence, the economic and financial landscape is markedly different from the one we saw during the years leading up to the global financial crisis. No longer are risk management, working capital optimisation and operational efficiency seen as activities applicable only to leaner times: rather, they form the bedrock of sustainable, successful business growth.
From discussions we are having with our clients it is very apparent that regulatory, compliance and risk management issues are critical priorities for corporate treasurers. Treasurers are focused on many facets of risk, including liquidity, market, operational, counterparty, compliance, reputation, country and business risks, resulting in new demands on banks and service providers, and changing the dynamics in the relationship between treasurers and their banks.
A key compliance issue in recent months has been SEPA migration. Many corporations headquartered in Germany, or subsidiaries of foreign companies based in Germany, are in the latter stages of their SEPA migration, ahead of 1 August 2014 when the national legacy systems close. While the additional transition period could have resulted in a loss of momentum towards compliance, this has not been the case, and companies of all sizes are focused on timely project completion. While migration to SEPA Credit Transfers has been relatively straightforward, SEPA Direct Debit adoption is typically more challenging in Germany where a sophisticated, mature direct debit instrument was already in widespread use. Consequently, whereas treasurers and finance managers quickly understood the new instrument, it was a greater philosophical and operational change to adopt it compared to those countries where direct debits are less common.
It has been particularly notable that while SEPA compliance has been a priority for treasurers, they have still been able to undertake other treasury optimisation and risk mitigation projects both concurrently with, and inspired by, SEPA projects. For example, a growing number of companies (including both large multinationals and mid-cap corporations) are leveraging the opportunity that SEPA presents to harmonise and centralise payments, collections and broader cash management both in the Eurozone and beyond. Many are setting up or expanding the reach of in-house banks, payment factories and shared service centres. While the specific objectives and priorities will differ amongst organisations, operational efficiency and control, improved visibility and better management of liquidity and risk are cited most often.
These projects are placing new demands on banks and service providers, resulting in a range of emerging technologies and solutions. For example, virtual accounts are successfully enabling treasurers to simplify their cash management structures by rationalising accounts and enriching the quality and depth of reporting both centrally and at a local level. Virtual accounts increase the speed and degree of automation with which reconciliation and account posting processes can be performed. It is not only solutions that are evolving, but also their functionality and deployment
Treasurers are increasingly seeking the sophistication and convenience that tablets and smartphones offer in a business context, leading to demands for real-time, group-wide visibility over liquidity and risk together with complex analytics. Consequently banks and other service providers are moving up the value chain in delivering solutions to their clients, responding to greater demands for advisory services, benchmarking and enabling technologies.[[[PAGE]]]
Treasurers’ - and their banks’ - focus on risk and regulatory compliance is also changing the relationship between corporates and banks. With counterparty risk now embedded in treasury policy, treasurers are no longer seeking a universal bank across their entire geographic reach. Instead, they are looking to their banks to offer best-in-class capabilities in the countries or regions in which they excel, augmented with a select network of alliances with leading local or regional providers. This approach offers corporates the convenience of a single point of access, information and service responsibility with a degree of richness in skills, expertise, risk-sharing and cost-efficiency that a single organisation would be unable to offer. For example, Bank of America Merrill Lynch’s highly successful alliance with Abu Dhabi Commercial Bank (ADCB) provides market-leading local services and expertise for clients, while ADCB’s local customers benefit from Bank of America Merrill Lynch’s global reach and capabilities.
The regulatory, economic and technology landscape will continue to evolve, and banks and treasurers alike need to constantly realign their priorities and reinvent their service offerings to position their organisations for emerging challenges and opportunities. Treasurers in Germany keep pioneering new services and require innovative solutions to risk, compliance and operational challenges. In response to these demands, Bank of America Merrill Lynch continues to deepen and broaden its capabilities in Germany, comprising a world-class transaction banking offering across cash management, trade finance and coverage, complemented by corporate and investment banking teams that together offer cohesive solutions across the full spectrum of corporate treasurers’ requirements.
How Thought Leadership Can Reduce the Cost of Sales by Patrik Havander, Havander & Partners A focused attention on the costs incurred by the global sales and marketing processes is becoming increasingly important for corporate banks and their transaction banking departments. While the client/bank relationship remains vital, research has shown that in fact relationship selling […]
