by Kristine De Lepeleire, General Manager International Cash Management & Cash Clearing, KBC Global Services
The economic landscape has changed unrecognisably in recent years, as a result of globalisation, the emergence of new regions, such as Central & Eastern Europe (CEE), Asia and Latin America, and the continuing ricochets of the financial crisis. These events have converged, and will continue to influence fundamentally the way that corporations do business. There are few companies today that find their suppliers and customers solely in their domestic market, and competition is increasing continually, with new market entrants often from remote regions with different business models.
The liquidity challenge
While Asia is often feted for its attractions both as a sourcing and consumer market, CEE is quietly continuing to grow and offers considerable opportunity for every industry. This is being recognised not only by European companies, but trade between CEE and Asia is also growing rapidly. As companies expand into new regions such as CEE, maintaining liquidity becomes more important but also more complex. In addition, the global financial crisis has resulted in constrained market liquidity, which further complicates treasurers’ and finance managers’ efforts. Often, companies have appointed local banks on entering new markets in the past, leading to fragmentation of cash, difficulties in achieving visibility and control and the considerable complexity of managing multiple banking relationships and interfaces.
CEE is quietly continuing to grow and offers considerable opportunity for every industry.
With liquidity at a premium, treasurers are increasingly focusing on rationalising and centralising cash. They are also seeking to work with fewer, trusted banking providers, in order to manage their counterparty risk while ensuring cash management efficiency. This is leading many treasurers to realise that they can achieve their cash management objectives by appointing regional banks. For example, the KBC Group, with subsidiary banks across CEE, has developed a reputation for proven capabilities in the region, combining local proximity, expertise and cultural appreciation with the ability to support a regional or global cash management strategy.