Setting up a New Treasury Centre for WTW

Following the merger between Willis and Towers Watson, we reorganised and streamlined the newly combined group’s treasury function and decided to set up a new treasury centre in The Netherlands. The plan for the new centre was to consolidate and unify treasury activities from the two legacy companies, improve visibility and transparency and service all jurisdictions with the exception of the US and UK due to their strategic importance and need for an in-country treasury team. 

Willis Towers Watson offered me the opportunity to manage the set-up of the new treasury company in The Netherlands, and as such, in February 2017 I packed my bags and transferred from London to Amsterdam to start on this once-in-a-lifetime project. From a personal point of view, the move to Amsterdam was easy. Having previously lived in The Netherlands, I considered it a home away from home. I spoke the language, was familiar with Dutch customs and culture — and knew how to survive when commuting by bicycle. 

Drawing up the project plan

On arrival in The Netherlands, my first task was to work with our legal and tax teams along with their outside consultants to determine the project scope and objectives, as well as the operating model for the company, which combined became the main building blocks for the project plan. Then we identified and prioritised individual tasks and set a schedule for implementation. We determined the staffing levels to physically be located in Amsterdam. We developed the job descriptions with the intention of filling the roles by the summer of 2017. 

A very talented member of our London treasury team expressed an interest in joining me in Amsterdam, and with a lot of work with HR, I had my first hire. Over the course of the summer, we were able to identify a third team member, an experienced outside treasury analyst. In terms of local finance support, a dedicated financial accountant was appointed who was already based in The Netherlands to manage the books of GTC; the opportunity to learn about treasury activities and foreign exchange was a big selling point for this job.

Now, one (that would be me) would assume that setting up an in-house bank is a cookie-cutter process with a straightforward recipe book of how it is done. Well, I was wrong! In part because of the specific jurisdiction(s) of the parent company, the existing intercompany relationships and the impact on all of the statutory entities, the process becomes quite bespoke for companies with otherwise simple ownership structures.        

First on the project plans was to form a new legal entity and as such in March 2017 WTW Global Treasury Company B.V. was born, and christened GTC, after a number of potential names submitted in a ‘name the treasury centre’ contest were rejected, in some cases with good reason.  

You need to think carefully about your capital structure – depending on how much risk you retain in the in-house bank, the desired equity as a percentage of assets may change significantly. 

Subsequently, and key in the project plan, was the engagement with internal stakeholders, such as different parts of Finance, Legal and IT teams, to ensure the design and operating model was achievable and sustainable and any considerations and recommendations from these parties were taken into consideration. 

At the same time, external stakeholders such as banks, advisors, auditors and system providers were involved to discuss the products and services required from these stakeholders. Critical to GTC was arranging credit, trading lines and the implementation of GTC on the treasury management system. As most treasury professionals know, your bankers may say they love you, but what they really care about is the quality of your balance sheet. As the GTC was a special-purpose subsidiary, we needed and received parental support in order to convince our banks to trade with us, in particular, in foreign exchange (FX).  

Implementing the plan

Next, the focus shifted to the management of the treasury activities migration process. The treasury activities previously managed out of a number of different entities in multiple jurisdictions needed to be transferred and consolidated into GTC.

Migrating the loan portfolio

The GTC team worked closely with its key bank, J.P.Morgan, to manage the FX transition. The remaining FX exposures in the previously used entities were managed through temporary intercompany loans until the next step of the migration process was completed.  

The last phase of the migration involved the changeover of the cash pool and sweep structures. On a designated date our banks were instructed to turn off the cash sweeps in the legacy entities and turn them on in GTC. We decided to do so on the last day of December 2017 to ease the changeover with its inherent interest and accounting implications. All the while we were mindful of the drive to minimise group cash over yearend, while both the old and new header accounts needed to be funded and operational. 

The migration phase took close to two months and once this was completed, the GTC was live and open for business. At the time of writing this article GTC has marked its first quarter of trading. And while it was a challenging project resulting in many sleepless nights on my part, the project was a success and thanks to the efforts of everybody involved, the GTC was up and running in the planned timeframe and the migration to make it operational was a relatively smooth process. 

Lessons learned