Reinforcing Transaction Banking in the UK

by George Stein, Head of Global Transaction Banking UK, UniCredit

Despite the short- and potentially mid-term uncertainty created by the result of the EU referendum in the UK and subsequent changes to political leadership, the UK is a large economy and a core market for exports from Europe and beyond. UniCredit’s London branch fulfils a vital role in meeting corporate ambitions in the UK, and for UK investors looking towards UniCredit’s home markets.

Meeting the needs of UK clients

Recent UniCredit economic research [1] highlights that foreign direct investment (FDI) has been an integral aspect of corporations’ globalisation strategy. When looking at the UK market specifically, this has two key implications:

• Firstly, looking at UK corporations, the UK has the second largest outward FDI stock globally after the US. While the US is a key market for these investors, as are special purpose vehicles in countries such as Luxembourg and the Netherlands, UK companies are also investing heavily in ‘real’ economies in other parts of Europe.
  
  
• Secondly, looking at continental Europe, Germany is the third largest foreign direct investor worldwide, with FDI of USD 1,600bn. In addition, UniCredit’s other home markets, Italy and Austria also have major outgoing FDI flows at USD 550bn and USD 220bn respectively. The UK is the second largest destination for these companies after the US. UniCredit research suggests that German and Italian companies will double their foreign investment activities by 2030, and Austrian multinationals more than triple their FDI outward stocks.
  
  

Facilitating trade and investment between the UK and our home markets was one of the major factors that led to the decision to build up the Global Transaction Banking business in UniCredit’s London branch. By reinforcing our ‘on the ground’ presence in the UK, we can better support our home-market customers as they pursue their international growth strategies, and build partnerships with UK companies that are seeking to leverage our solutions, expertise and depth of presence in our home markets of Germany, Austria and Italy, and in central and eastern Europe (CEE). 

The role of transaction banking

UniCredit has a strong strategic emphasis on transaction banking, which involves leveraging our branch in London, along with many other branches of our international network, including New York, Hong Kong, Singapore and Shanghai to meet the international needs and aspirations of our customers. In London, for example, although transaction banking has been an important aspect of our service delivery for many years, we are making a major investment in skills and solutions to build capacity and expand the breadth of our services. For example, we are expanding our proposition in both cash management and trade finance to support the large number of exporters based in London, and we have reinforced our correspondent banking relationships, with particular strength in the CEE region. Furthermore, we are now offering a newly enhanced platform for both corporations and financial institutions seeking to concentrate their cash in London, which we believe will prove to be very attractive to customers in our home markets and beyond.

Notes

[1] UniCredit Global Themes Series no. 33, June 2016

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A flagship offering

One of the reasons that customers across our network choose to work with UniCredit is the quality of the bank’s technology solutions, and the UK is no exception. This is the result of sustained investment, but also the high expectations of our customers in the advanced markets in which we operate. As part of this ongoing investment, our flagship project is our new global ebanking portal. This will be launched first in London, reflecting the importance of the UK within the UniCredit group. This portal will help customers to manage cash and liquidity across the UniCredit footprint more effectively, leveraging the latest developments in security, such as multi-factor authentication, usability and interoperability, including flexible, secure means of importing and exporting data. 

For both UK customers operating in Europe, and home-market customers developing their business in the UK, managing working capital effectively is a crucial factor of success. Leveraging the right transaction banking solutions across payments, collections, cash pooling and trade finance is essential to optimising the short end of the balance sheet. We support customers by understanding their current and anticipated working capital needs in detail, and build solutions accordingly.

With supply chains becoming ever more complex, which has an important bearing on working capital, we are able to leverage our network to connect buyers and sellers and therefore accelerate the supply chain and optimise working capital. We are building on our existing success in developing robust supply chain finance solutions, such as receivables financing, reverse factoring and vendor finance in Germany to offer comparable solutions in the UK as part of a cohesive global product offering.

Customer commitment across our network

UniCredit has built up a loyal, diverse and expanding base of customers over many years who value our commitment to long-term relationships and focus on trust and reliability. Strengthening our transaction banking offering in the UK is another demonstration of our commitment to these customers, based on leading-edge technology, solutions and services to meet their evolving business needs. The recent EU referendum result in the UK does not alter this commitment.

We have reinforced our commitment to our network, which is very important to both new and long-standing customers. Transaction banking continues to be a pivotal part of UniCredit’s business, including its investment in foreign branches such as London and Madrid, which was opened in February 2016. By getting the day-to-day business such as payments, cash management and trade finance right, we can build trust and confidence, and encourage wider, deeper relationships across the bank’s portfolio.