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Prepare for Changes in Cash Pooling

Prepare for changes in cash pooling

by Arnaud Pichon, International Desk Supervisor and Benoit Desserre, Global Head of Payments and Cash Management, Société Générale

Arnaud Pichon and Benoit DesserreBasel III, expected to come into effect by 2019, will have massive implications for the notional cash-pooling business, making it much harder for banks to offer this service profitably. This is likely to force some banks to reconsider the business, either by repricing their offering or by exiting relationships altogether, warns Société Générale. 

Notional cash pooling allows corporates to manage group finances from a single account, giving corporate treasurers a convenient, consolidated view of accounts that might be spread across a number of affiliated institutions, in different jurisdictions and currencies. 

While it is not allowed in the US, it is popular in Europe and Asia as an efficient way for large multinational corporates to manage their balance sheets at a group level. It allows such corporates to offset their liabilities – including those of their subsidiaries – against their assets.