Cash & Liquidity Management

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Concentrating Cash and Positioning for Growth at Panini Peter Harris and Fabrizio Masinelli, from the Panini Group, describe how UniCredit helped the company to a successful implementation of cash pooling.

Concentrating Cash and Positioning for Growth at Panini

by Peter Harris, Group Chief Financial Officer, and Fabrizio Masinelli, Group Treasurer, Panini Group

Panini has experienced very rapid expansion in recent years, in terms of both its geographic reach and the extension to its product range. Over this period, cash management has been a lower priority compared with addressing the immediate needs of a growing company. As the company matured, Panini’s senior management recognised that there needed to be a renewed focus on optimising cash and mitigating financial risks to position the company for the next stage in its development. Panini has a seasonal cash flow cycle, with large cash surpluses at certain times of year that needed to be repatriated to the head office in Italy and managed centrally, to net surpluses and deficits across the group.

Appointing a banking partner

With cash concentration a key requirement for Panini, the company was seeking a banking partner with a strong presence in each of its key markets, or a partner bank with a common commitment to product and service delivery within an integrated framework. Panini had an existing relationship with UniCredit in Italy, and made the decision to extend this relationship for cash pooling across the group, whilst maintaining its existing banking partners in each country, recognising that a multi-bank environment helped to reduce its credit and concentration risk.

Implementing a cash pool

UniCredit worked with Panini to implement cash pools across the business, with one cash pool for each major currency. In Europe, zero-balancing structures were put in place, while in the United States, target-balancing was introduced, recognising that there were two sets of very distinct needs in the business.

The first countries to be implemented were Spain and the United States. Even though UniCredit does not have a presence in Spain, the bank worked closely with its partner bank, Santander, to implement a cross-border zero-balancing arrangement. In this way, Santander acts as the local bank, providing most of Panini’s payment activities, and transfers surplus funds on a daily basis to UniCredit in Italy for same-day value. In the United States, Panini recently won various US sports licences for trading cards, expanding its activities there. The use of large volumes of cheques and the structure of the banking sector in the US, with no single bank able to provide comprehensive services across the whole country, force Panini to make use of local banks. UniCredit New York, the local point of presence, is connected to the company’s main USD account in Italy on a target-balance basis. The role of country cash concentrator seems to fit precisely to UniCredit in this situation. Proceeds from sales are indeed regularly deposited in UniCredit New York by local banks, and then automatically transferred each day to Italy.

With these two countries now connected to the relevant cash pools, the next step will be to implement in Poland, Germany and the Netherlands, although the order in which these countries will be addressed has not yet been determined. Implementing cash pooling in Poland can be challenging due to regulatory constraints; however, Bank Pekao, the local UniCredit bank, having successfully created several zero-balance structures, can provide the necessary expertise and consulting to complete the project. Due to Panini Group structure, it will be necessary to pool cash initially into Germany, and then to Italy. This two-tier approach will be supported by a synchronised target balance scheme, so that same-day value can be achieved on funds received in Italy.

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