Addressing Challenges, Delivering Value
by Helen Sanders, Editor
The TMI Corporate Recognition Awards reflect the pinnacle of achievement in treasury and finance policy, practice and innovation. With the help of banks, technology providers and consultants, the treasury and finance functions featured in these Awards have addressed common challenges in new ways, overcome obstacles and delivered successes that have a tangible impact on the organisations of which they are a part. One observation from reading through all of the winning submissions once again is that these projects have not been without difficulty. A characteristic of some of the projects that have ultimately proved the most successful are those where treasurers, finance managers and project managers have had the confidence to stop, regroup and change direction where necessary. Treasury solutions and advice are not hard to come by, but personal and organisational confidence can be more elusive. With our thanks to all those who submitted such excellent Award entries, either directly or on behalf of their clients, and congratulations to our Award winners. And, as they say, in no particular order…
Treasury of the Year
What marked Etihad Airways (Etihad) out as TMI’s 2016 Treasury of the Year was the breadth of activities in which treasury has excelled. While many treasury functions can deliver a specific project alongside ‘business as usual’ activities, Etihad has driven change and innovation on multiple fronts, despite having a small treasury team. These include:
- Re-engineering of its cash and banking structure across 71 countries to support the company’s ambitious growth plans. The objectives included promoting centralisation and improving controls by establishing strategic banking partners and best-in-class cash management structures, automating processes and improving account visibility. Following an extensive RFP process, Etihad awarded mandates to National Bank of Abu Dhabi for the Middle East, and Citi as its international partner bank. As a result, treasury achieved its cash visibility and operational objectives, whilst also benefiting from consistent processes and decision-making, enhanced liquidity management and lower costs.
- In conjunction with this project, Etihad reviewed its technology infrastructure and opted to replace its existing treasury management system and replace it with OpenLink’s Findur for payments, cash and treasury management, with 360T for online dealing and SWIFT for bank connectivity, as recognised in the 2015 TMI Corporate Recognition Award for Payments, which was explored further in edition 242 of TMI.
- Finally, Etihad deserves recognition for its $700m collateralised loan obligation (CLO) to raise five-year unsecured debt for members of Etihad’s equity alliance of six airline partners – Etihad, Alitalia-CAI, Air Berlin, Jet Airways, Air Serbia and Air Seychelles – and Etihad subsidiary - Etihad Aviation Services (EAS) for capital expenditure, fleet investment and refinancing. The financing was arranged on an unsecured basis, despite the fact that some of the obligors are weak credits. Each of the obligors’ material obligations is on a standalone basis, with each paying a rate of interest commensurate with its standalone credit rating, resulting in a weighted average coupon of 6.875%. This innovative ‘platform financing’ structure enables all participating airlines to access the capital markets in a transparent and efficient way, while allowing investors to capture multiple airline risks in one structure, buying into large, liquid structure, and a proxy to a group performance as opposed to a single entity exposure.
We look forward to featuring more of Etihad’s story in future editions of TMI.
Cash Management – Europe
The Estée Lauder Companies Inc.
Estée Lauder has established a global reputation for high quality, premium beauty products, but the group’s commitment to quality and excellence applies across the full reach of its activities, including treasury. Together with consultancy firm Zanders Treasury & Finance Solutions, Estée Lauder’s treasury has undertaken a series of projects that have resulted in a highly efficient cash management organisation that also forms the foundation for future innovations. These include developing a treasury roadmap of short-, medium- and long-term objectives, rationalising bank relationships and connectivity and implementing a pan-European cash pool with BNP Paribas. These initiatives position Estée Lauder’s treasury for future innovations, such as implementing a payment factory that operates on a payments-on-behalf-of (POBO) basis.
Bart Taeymans, Executive Director, International Treasury Centre, the Estée Lauder Companies Inc. presented at BNP Paribas’ 2016 Cash Management University with Hugh Davies, Director, Zanders Treasury & Finance Solutions. The article which follows their presentation can be found in TMI’s Innovation in Cash Management supplement, an overview of the 2016 Cash Management University, published in association with BNP Paribas in December 2016.