Cash Management
Bank downgrades prompt treasurers to better understand their exposures
Counterparty risk becomes top concern for treasurers as ratings agencies continue to downgrade banks on both sides of the pond.
EuroFinance Rome
Visibility of cash and counterparty risk and tighter integration between ERP and accounting system and dealing and reporting platforms for enhanced cash forecasting and liquidity management, were dominant themes at this year's EuroFinance conference in Rome.
Royston da Costa, group assistant treasurer, Treasury Systems & Development, Wolseley, outlined how his organisation plans to move to 100% cash visibility and improved STP processes for cash forecasting using a well-integrated treasury management system from IT2. It is also looking at leveraging SWIFT for improved reporting.
Banks continue to enhance liquidity management offerings
Banks and vendors attending the conference also made a raft of announcements regarding enhancements and new solutions to help treasurers achieve the level of transparency and control they are looking for over their cash and liquidity.
Royal Bank of Scotland announced its Liquidity Solutions Portal, which provides a single platform for viewing cash balances across multiple bank accounts and currencies in real time for enhanced cash forecasting. The portal also includes self-service capabilities so treasurers can go in and change how pools and sweeps work. "Self service is becoming a differentiator," says Steve Everett, head, international liquidity management, RBS Global Transaction Services.
At EuroFinance, Deutsche Bank also announced an integrated offering from its GTB and Global Markets divisions which provides treasurers with a "single window" to treasury and liquidity services, including a money market and FX trading platform.
Counterparty risk back in vogue
Now that counterparty risk is back in vogue, Everett of RBS says treasurers want to be understand their exposure to different banks in different parts of the world. As the ratings agencies continue to downgrade European and US banks on the back of sovereign debt issues and other concerns, Everett says counterparty risk, not yield, has become treasurers' number one priority.
Tory Hazard, CFO of money market portal provider, ICD, says in an effort to better understand their total exposure to particular banks, treasurers are using a wide range of analytics (CDS spreads, stock data, ratings) to better understand what are the underlying holdings of the money market funds they are invested in.
Ed Baldry, CEO, Europe, for ICD, says by using analytics provided by independent portals such as ICD, treasurers "can make more informed decisions without painting everyone with the same brush." ICD says money market investors are "voting with their feet" and that funds are responding by reducing their long-term exposure to European banks.
Date Posted:14th October 2011