Published: November 01, 2008
Bombardier Inc., a world-leading manufacturer of innovative transportation solutions, from commercial aircraft and business jets to rail transportation equipment, systems and services, that is headquartered in Montreal, Canada. With revenues of $17.5 billion for the fiscal year ending January 31, 2008, Bombardier maintains a centralized treasury from the point of view of foreign exchange trading and investing in Montreal. Bombardier employs a workforce of 59,760 people worldwide with more than 96% of revenues generated outside of Canada. Bombardier is a global provider with a presence in more than 60 countries on five continents, including manufacturing facilities in 21 countries. With two back offices, one based in Zurich, which handles the European and Asian entities, and the other in Montreal, Bombardier is required to tackle the many regulatory initiatives that are happening worldwide.
Europe
In 1999, Bombardier established its Treasury Center in Zurich. The Zurich back office is most affected by the Single Euro Payments Area (SEPA). Therefore, the treasury team in Zurich was charged with the responsibility of leading the way forward on this initiative for the rest of the organization. In early 2008, Bombardier conducted a review of all systems to ensure that they could handle the use of bank identifier codes (BICs) and international bank account numbers (IBANs), which would be required for SEPA. The payments platform that was used in Zurich did not accept the additional field requirements for BICs and IBANs so an upgrade was on the horizon. As Bombardier was leveraging multiple SAP platforms, efficiencies needed to be created as some of these platforms became outdated.
With a lack of personnel to manage ongoing developments internally within the corporate and externally such as SEPA and other changes to bank regulations in the eurozone, Bombardier was looking for a more efficient way to manage its cash management business in Europe. In addition, there was concern about more efficiently handling investment of excess funds and country-specific regulations. [[[PAGE]]]
Asia
Working with Deutsche Bank, Bombardier remains informed on all issues that could have a major impact on processes.
Bombardier’s transportation franchise has legal entities in the following Asian countries: China, India, Korea, Malaysia, Singapore, Thailand and Taiwan. With 17 different local banks, it was difficult to manage the cash management needs of these businesses in a cohesive manner. Excess cash was growing monthly and financial management consolidation was becoming necessary because there was no visibility for cash excesses. It was challenging to know where cash was invested and Treasury required more control of assets. In addition, senior management requested that the region follow certain corporate procedures, yet the necessary human capital was not available. Documentation negotiations were to be centralized within the corporate, a challenging task as each country has specific documentation requirements. With a shortage of treasury personnel to deal with multiple banks as well as ongoing SAP implementation and local information technology (IT) issues, Bombardier was in need of a bank partner who could help them manage these efforts efficiently and centrally.
Bombardier partnered with Deutsche Bank to create an end-to-end scalable solution for Europe and Asia. In summary, Bombardier was provided with:
1) enhanced cash visibility in both of these regions;
2) centralized documentation to help Treasury negotiate the terms and conditions at the headquarters (HQ) level only;
3) consultative advice on the latest requirements for SEPA;
4) clarification of country-specific regulations for Bombardier HQ;
5) a multi-geographic integrated customer-focused after-sales Account Management service.
Deutsche Bank’s customized offering matched up with Bombardier’s specific requirements, allowing them to take the Bombardier/Deutsche Bank transaction banking relationship to the next level. After understanding the tasks on both Bombardier and Deutsche Bank’s sides, the sales effort was coordinated on a global level. A sales coordinator was appointed at Deutsche Bank who interfaced with the Global Treasury Coordinator at Bombardier. All stakeholders were kept in communication which set the stage for the implementation team to connect.
Optimum resources were stacked up at three levels to ensure that the solution which was created by Bombardier and Deutsche Bank was translated into a reality in a consistent and transparent manner. The following teams were formed by the Bank with corresponding points of contact from Bombardier:
Parties from Deutsche Bank and Bombardier acted collaboratively within the global framework and communicated this framework to the regional and in-country teams.
The foregoing efforts are yielding positive results. Working with Deutsche Bank, Bombardier remains informed on all issues that could have a major impact on processes. Deutsche Bank, the #1 euro clearer worldwide (RTGS+/TARGET/EBA), understands the challenges that corporates may experience with the changing environment. Through regular updates, Bombardier is provided with information on issues like SEPA and other country-specific requirements such as central bank reporting that can result in challenges to straight-through processing (STP) for payments. In addition, Deutsche Bank’s internet-based electronic banking system, which accepts standard SAP files for SEPA payments as well as provide structured SEPA/SAP compliant electronic account reporting for automatic reconciliation, makes the transition seamless.
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Jointly, Bombardier and Deutsche Bank have developed the solutions that match the needs of Bombardier’s clients. Asia remains an amalgam of many countries with diverse cultures, traditions and practices. Not dissimilar to Europe, corporates in Asia are confronting country-specific regulations along with their unstructured interpretations as well as the management of multiple banking relationships in the regions. They face many challenges, including those pertaining to country-specific clearing systems as well as complex regulations around cash sweeping and pooling (in-country and cross-border). The central bank reporting requirements are another set of challenges which are not only cumbersome and demanding but also inhibit STP and rationalization of banks and accounts in certain countries.
Bombardier was looking for a more efficient way to manage its cash management business in Europe.
Bombardier and Deutsche Bank have taken these factors into consideration before creating an efficient and workable solution in those countries. Deutsche Bank ensures that it handles Bombardier’s central bank reporting in order to free up this corporation’s resources. The bank also continues to share its experiences with Bombardier on best practices, for example, on clearing, liquidity management, etc. This is particularly important for countries that have stringent regulations.
Bombardier and Deutsche Bank have formed a true partnership with an ongoing dialogue between representatives from both sides. As new regulations and other changes occur in the market, these needs can be served in the most efficient manner. A centralized solution allows Bombardier to benefit from enhanced cash visibility and more efficient operations. By helping Bombardier with central bank reporting where required, Deutsche Bank has enabled Bombardier to refocus its local personnel on other finance issues instead of matters that the bank can manage for them. Furthermore, the rationalization of banks and accounts will create further efficiencies in Bombardier’s local operations.
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