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Cash & Liquidity Management
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Thinking Global

Cash Management Centralisation at Pepe Jeans

by Ricard Mas, Group Treasurer, Pepe Jeans

When I joined Pepe Jeans in 2006, I found a vibrant and exciting company. It was facing many of the challenges associated with rapid corporate growth, such as the need to formalise financial policies and procedures and reorganise certain back office operations, such as cash management at a group rather than local level. A priority early on was establishing a clearer distinction between Treasury and Accounting to satisfy corporate governance and compliance requirements. There was also a need to centralise the group’s cash and treasury management activities at our headquarters in Barcelona. There were a variety of issues to address in order to achieve this, both internal and external. One of the elements we needed to consider was our external banking model, including how to centralise our cashflow in order to have quick and direct single channel access to company funds in a fast paced industry requiring continuous investment.

Diverse cash management requirements

Pepe Jeans operates using two distinct models. In some countries, we have a retail network, while in others where the scale of business does not, for example, warrant direct investment in infrastructure, we sell our products on a wholesale basis through licensees or distributors. This results in two distinct sets of needs from a treasury point of view: the retail business requires processing of cash and credit cards, for example, whereas working with licensees and distributors is closer to wholesale banking. We produce most of our goods in Asia, which are purchased in USD and shipped mostly to ports in Spain and the Netherlands, with the bulk of our goods then sold in EUR and GBP.

Before looking at individual banks’ capabilities, we reviewed our specific requirements and nature of our presence in each country, which could be retail, wholesale or a mix. Once we had established an overall view, we could then consider the profiles of the banks we were working with and gauge how closely they met our needs. This was a very disciplined process, involving detailed requests for proposals and an objective assessment of bank capabilities compared with our requirements. As a medium-sized company, we have restricted access to credit, so it was not feasible to appoint a single pan-European bank; however, we decided to work with three carefully selected banks. As our largest network of owned stores is in Spain, we needed a significant branch network, so BBVA was selected as our domestic bank in Spain. For the remainder of our European business, we decided to work with Fortis and Deutsche Bank. We had worked with Fortis previously, but Deutsche Bank was a new relationship.