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Treasury Strategy & Transformation
Published  6 MIN READ
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The Power of Partnerships

by Christian Behaghel, Head of Global Transaction Banking, and Benoit Desserre, Global Head of Payments and Cash Management, Societe Generale 

With SEPA migration now behind us, treasurers and their banks can focus on other issues that are impacting on cash and treasury management, whether market, regulatory, strategic or operational. One of the most significant questions that our clients want to discuss, not only large corporations but mid-cap and smaller corporations too, is how their banks can support their international strategy. In some cases, this involves expanding into new territories while for others, the priority is to leverage new opportunities in existing countries, such as understanding the implications of changes to capital and FX controls in China. Treasurers rely on their banks to deliver comprehensive cash management solutions and services in new and existing territories. Just as importantly, however, they are seeking high-quality advisory services to understand the treasury implications of their corporate growth strategy and help to devise appropriate organisation models, risk and liquidity structures and financial processes.

Simplify, diversify

Complex and volatile market conditions are inevitably prompting discussion between treasurers and their banks on how to increase simplicity and clarity. The extended period of heightened market volatility together with an unprecedented period of low, and in Europe negative, interest rates, is resulting in company boards rethinking their risk and liquidity policies. Banks such as Societe Generale are responding by offering their wealth of market knowledge as well as tools that help treasurers to manage risk and secure access to liquidity. For example, we are helping clients to unlock the value of balance sheet assets as funding collateral, and promote a flexible and nimble approach in the way that assets are used to benefit the business. Ten years ago, only small companies or those in financial distress would engage in factoring. Today, even the largest and most financial stable corporations are using factoring to diversify their funding sources and harness their financial assets as effectively as possible.

It is not only funding mechanisms, but also funding geographies that are changing. Until recently, treasurers would typically rely on their major domestic market to raise funding, often in a G7 currency, even if this was not the currency of their home market or the currency in which they required funding. Today, treasurers are more inclined to raise finance in the currency of the market in which they are investing, resulting in far more local funding in a wider range of currencies, particularly in Asia.

Partners in international growth

Corporations’ evolving international growth and funding strategies have a considerable impact on their banking choices. On one hand, companies are trying to centralise cash and treasury management into regional or global treasury centres, which typically involves rationalising banking partners. On the other, they do not want to lose access to expertise, solutions, local presence and time- zone support in their key markets.