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Treasury Strategy & Transformation
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The End of Global Banking?

by Dick Oskam, Global Head of Sales, Transaction Services, ING

Dick OskamCentralisation is perhaps the most important cash management trend we have seen over the past few years, with treasury functions of all sizes and in all industries seeking to create economies of scale and standardise treasury policies, processes and technology. The Single Euro Payments Area (SEPA) has been a catalyst for these efforts through harmonised payment and collection instruments and a common legal framework across the Eurozone. It is becoming increasingly clear, however, that while efficient centralisation involves rationalising bank relationships, it does not – and should not – imply a shift to a single banking partner.

The global financial crisis emphasised the importance of diversifying bank relationships but initially, the focus of bank risk management was to protect the business from the impact of bank failure. Following recent announcements from several banks about strategic changes to their business, it has become clear that managing bank risk also involves mitigating the impact of banks’ voluntary termination of specific services or withdrawal from particular markets. Although the impact of these decisions may not be as significant as bank failure, they lead to considerable inconvenience and loss of trust amongst the clients that are affected, and the outcome is similar: namely, that treasurers need to act quickly to avoid disruption to their business.

Firstly, corporations need to have relationships with other trusted banks that offer equivalent solutions in the relevant markets. This involves keeping up to date with banks’ capabilities and maintaining a relationship with leading banks in the relevant markets. Despite the technical and legal feasibility of managing cash from a single location and even a single account, treasurers still value a local banking presence and specific expertise in each country in which they operate as highly as ever. This applies not only in countries that maintain local payment types, such as Italy, but across their footprint.