Treasury & FX in Ukraine

This call, attended by six senior treasury peers representing five multinational corporations
across the UK, Europe, and US, was focused on peers’ perspectives of the current situation in
Ukraine, the issues they face and their approach to these issues.

The call was chaired by Arnaud Francq

This report (in full below) was compiled by Monie Lindsey

Summary of peer call findings

  • Current situation in Ukraine: 
    • Everyone currently perceives Ukraine as stable with relatively free movement of funds cross border. 
    • Several admitted that the Ukraine was not a focus for them as there were no issues to warrant focus and the local teams were handling things satisfactorily. 
  • Local teams: 
    • Most peers have local teams running the day-to-day banking and treasury operations in Ukraine with minimal involvement required from corporate treasury.  One peer was in the midst of setting up local accounts and processes – repatriation of dividends, local collections, local salary payments, T&E processes, inline access, etc. 
    • These teams deal with the complexities of local banking arrangements and processes, often made more complex due to dated operations and online systems.  
    • One peer who established a legal entity two years ago with two employees, contracts with PwC for accounting – salaries, expenses, VAT, etc.
  • Cash repatriation:
    • There are no restrictions as in the past on repatriations via dividends
    • However, it is required that divided payments be initiated out of Ukraine versus a centralized in-house bank solution.  It is not possible for corporates to transfer dividends ‘on behalf of’. 
    • A question was raised by a peer still in the process of establishing treasury and payments processes in Ukraine, regarding documentation required to initiate dividend payments.  The response was essentially that you need the dividend decision and a signed shareholder resolution. The responder acknowledged that there may be additional forms and processes required that the local team would handle. 
    • One peer had withheld their dividend distribution last year primarily due to headquarters country tax issues.  The local team indicated there were some local issues, but in the end the dividend was held back solely due to the headquarters country tax issues. 
  •  Local treasury and payments solutions:  
    • Most use a combination of international and local banks including the following:
      • International banks
        • Citi
        • BNP Paribas
        • Credit Agricole
      • Local banks
        • One peer uses 4 local banks but did not provide the names
        • Several use UkrSibbank (BNP Paribas’ affiliate bank)
  • Local banking issues
    • With the exception of the peer currently establishing local processes and banking services, the other peers on the call noted that the local teams handle the management of local banking services and processes and only notify corporate treasury if there are any issues.  None had been contacted recently (last 6-12 months) regarding local issues 
    • The one peer still establishing services and processes noted the following issues
      • Salary payouts – Ukraine requires that companies offer payroll cards or salary cards to employees to ensure timely receipt of payments. The country manager is held responsible in the event of delayed salary payments 
        • This peer was wary of the salary solutions offered by local banks 
        • Others on the call are using third party bureaus or agents
      • Local banking portals – Past initial set up, it is very complex and bureaucratic to add shared services center users to the local banking portals
      • USD receipts – Although a small percentage of receipts, some international clients pay in USD.  Ukraine requires that 15% be converted to local currency and deposited locally, while 85% is deposited to a USD account
  • FX hedging
    • No one is hedging onshore in Ukraine due to limited options and liquidity
    • All Ukraine related hedging is handled centrally by corporate treasury
    • FX hedging requirements are nominal for the peers on the call

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