Published: November 01, 2009
Based in the US, Qualcomm Incorporated is one of the world’s leading providers of wireless communication technology and services. With global operations and an expanding international presence, the company was eager to find solutions to improve the efficiency of its centralised treasury. Of particular concern was how to enhance the management and interest result on their growing portfolio of local currency accounts.
The challengeQualcomm is headquartered in San Diego, California, but our innovative chipset technology is used to power wireless networks and handsets all over the world. As a result, we have a number of subsidiaries throughout the Europe, Middle East and Africa (EMEA) region, to which RBS provide a range of services. One of these subsidiaries is Qualcomm Europe: a business unit with operations in the UK, Germany, the Netherlands, France, Poland, Spain, South Africa, Sweden and, most recently, Russia. For our treasury team, which is based in the United States, the easiest, quickest and most cost-effective way to fund these operations has been to transfer funds from our head office accounts to the local operating accounts with RBS in each country.
As the business has expanded, the number of local operating accounts that we have to maintain has grown. Each account typically maintains a positive cash balance, so we began looking for ways to manage group liquidity more strategically and increase short-term investment income, without losing the convenience of local accounts or entering into complex pooling structures. Consequently, a primary goal was to improve interest earnings within a decentralised account structure.
Qualcomm has worked with RBS as a banking partner for payments and collections in EMEA for a number of years. The bank had already helped our Enterprise Services Europe fleet management business (QES Europe) to establish an automated cross-border pooling solution for euro accounts in six countries. In Qualcomm Europe, however, we needed to manage a range of currencies. One option was to sweep balances into notional pools by region and currency. However, we have a relatively small treasury team and we were looking for time and cost-saving tools to reduce the need for active management and funding. With this in mind, we approached RBS, on the basis that the bank already provides Qualcomm Europe’s local accounts, for a solution. RBS suggested its Cross-Border Cash Optimisation (CBCO) solution as a far less labour-intensive and more cost-effective alternative.
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We reviewed the CBCO solution and determined that it was a suitable means of achieving interest rate optimisation across accounts in multiple accounts and branch locations. CBCO automatically adds up the different balances and uses the total, notionally converted into an agreed base currency, to calculate a bonus interest payment. This benefit is paid monthly in our preferred currency, in addition to the monthly interest earned on each local account. Consequently, we can now enjoy the interest rate advantages of a single account combined with the practical benefits of local accounts, while minimising the time and resources needed to fund our local Qualcomm Europe operations.
The fully automated CBCO solution has given us both convenience and control in Qualcomm Europe. As a passive solution, there is no additional work for our treasury team or the need to change our local accounts; however, the solution actively manages our cash balances on an automated basis.
After an initial discussion with RBS to set bonus payment rates in line with agreed balance levels, there were few set-up demands on Qualcomm and minimal legal requirements or paperwork. We were then able to gain immediate benefit from the solution, such as bonus interest payments at the end of each month together with in-depth reports on the improved performance of our accounts.
CBCO is wholly scalable so it will be able to accommodate our ongoing requirements as the business expands. Since the initial implementation, we have added our rouble and USD accounts in Russia into our CBCO solution. This was a straightforward process, generating additional returns as our overall balance increases. CBCO also means that we do not need to fund our local Qualcomm Europe operations as frequently, as cash remains in local accounts, as well as benefiting from an enhanced yield.
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