Published: November 01, 2012
From credit revolvers to commercial cards, from SEPA Direct Debits to debt capital markets, the subjects of conversations between treasury and bank are wide and varied. Banks are often accused by corporates of approaching their relationship coverage with a big bang approach – the more experts they bring to a client meeting the more they believe it will demonstrate their knowledge and commitment to the relationship. All client needs are unique and to that extent so too must the way banks interact with them be. With the formal launch of a Global Corporate Bank in 2009, J.P. Morgan has been striving to ensure that a corporate treasurer is at ease with understanding who they interact with and why.
In France, for example, the firm has played an important role in the banking industry for over 100 years, and is increasingly one of the global banks of choice for French multinationals as they consider how best to manage their international banking business.
Obviously well known as an industry leader for North American payments, treasurers are now turning to the firm to discuss their challenges in geographies such as Latin America and Asia Pacific. To ensure the treasurer does not feel there is repetition when voicing their challenges because of separate meetings with different people, the J.P. Morgan coverage model has allowed the client to feel comfortable that they are being listened to at the very start, that the right people are engaged and therefore they know that a proposed solution will be forthcoming.
This article discusses how strong relationships are being forged and how clients are benefiting.
In the early years of our business in France and Belgium, we focused on investment banking, but more recently, we have extended our activities to Corporate Banking and complementary business functions such as Treasury Services, FX, Cards, Liquidity, Asset Management etc. An important element of our value proposition in these countries is the degree of integration and communication that exists across each of the areas, such as Corporate Banking and Treasury Services. We collaborate closely to understand the needs of our large multinational corporate customers at a detailed level, and deliver customised, holistic solutions that specifically match these requirements. Initially, customers were attracted to J.P. Morgan for USD processing, as the firm is a clear industry leader in USD clearing, but increasingly these customers are also leveraging our services in other regions as our geographic footprint and depth of services has expanded.
Cultivating relationships and showing our commitment to helping clients implement their growth and business strategies was brought to the fore in supporting a transaction conducted by Sanofi-Aventis last year and demonstrated our complete capabilities across our global platform and franchise. This co-ordinated approach extends not only within France and Belgium, but across our whole network . It is particularly important for our multinational customers as they seek a banking partner that can maintain a close relationship with group treasury, but also has the proximity and depth of relationships locally to be able to manage credit requirements in each region and deliver local services.
We work with our French and Belgian multinational customers to address a wide range of priorities, which frequently differ by region and industry. For example, in Europe, we are helping customers to migrate to SEPA for payments and collections. By standardising payment and collection methods across the Eurozone, customers can leverage our euro clearing infrastructure to rationalise banking providers, simplify cash management and centralise processes. We have always taken a regional approach to European cash management, as opposed to supporting each domestic market individually, and this approach is proving particularly advantageous in implementing, and maximising the benefits of SEPA. Furthermore, as a pioneer in XML-based standards, we are enabling our customers to standardise and centralise their cash management and treasury activities at both a regional and global level.
In Latin America and Asia, we support treasurers in unlocking trapped cash and repatriating cash from across the business, taking advantage of our sophisticated liquidity management solutions and in-depth knowledge of local regulations and the evolving opportunities that exist in countries such as China, India and Brazil. A number of banks have pulled out of some emerging markets, such as in Latin America following the financial crisis, we continue to support our clients to avoid interruption to their strategic growth plans in these regions. China is a country of particular strategic focus, and we are seeing strong interest in the use of RMB as an international currency, such as in cross-border trade settlement, and we are investing heavily in expertise and solutions such as electronic banking and RMB liquidity solutions, to enable our customers to take advantage of these opportunities.[[[PAGE]]]
Global USD management remains a major factor in multinational corporations’ decision to work with us, particularly amongst industries that make significant use of USD for sales or sourcing. Even though some European banks are now finding it easier to access USD than during the immediate aftermath of the 2008-9 crisis, treasurers’ concerns about counterparty risk management and the ability to access a robust and secure infrastructure for USD clearing are clear factors in J.P. Morgan’s favour. The focus on counterparty risk has resulted in trade finance instruments, such as letters of credit, becoming more important. Trade finance is a key business function for J.P. Morgan, reflected in our recent TMI Award for Innovation and Excellence in Financial Supply Chain Management, in which the firm received the global accolade, and specific recognition for our trade finance activities in China. In contrast trade finance is an area that a number of other banks are no longer supporting.
It would be unrealistic to assume that our multinational customers should work exclusively with J.P. Morgan, and indeed a global banking approach may not always be desirable for either the bank or the corporation. Following the global financial crisis, we witnessed a shift in banking relationship strategy. Treasurers moved away from the objective of appointing a global cash management bank, and instead sought a bank for each region or key country. For example, they may have chosen a French bank for parts of Europe, a bank such as J.P. Morgan in the US, and a bank with a strong regional presence in Asia and Latin America.
We are now seeing another shift, in that companies are selecting a bank for each major currency (or currencies). A currency-based approach to banking relationships can be highly efficient and enable liquidity across the business to be concentrated very effectively. However, it is most successful when combined with a centralised approach to cash and treasury management. In this structure, J.P. Morgan has a natural role as USD clearing bank for all a corporation’s entities worldwide, and centralising USD liquidity in one location, such as London or New York. In addition, with capabilities across more than 130 currencies, we are the logical choice of banking partner for managing major foreign currency flows and foreign exchange settlement in many parts of the world, including Western Europe, Asia and Latin America.
At J.P. Morgan, we are significantly expanding our customer base amongst French and Belgian multinationals. Companies are attracted to the strength of our balance sheet, geographic reach, comprehensive portfolio of solutions, industry knowledge and services, such as in cash and liquidity management and trade finance, and our commitment to technology innovation. Just as importantly, they appreciate our cohesive approach in providing specific solutions to meet their needs, and our focus on clear communication both centrally and locally.
Although Corporate Banking is still a relatively new business function for J.P. Morgan in France and Belgium, it has gained traction remarkably quickly amongst corporations that are seeking a strong international banking partner that can support their global growth objectives. We recognise the enormous potential that exists amongst French and Belgian multinationals for international expansion, not only large multinationals, but mid-cap companies too, and we are continuing to invest in our solutions and geographic reach to facilitate this expansion and help each customer to meet its international objectives.
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