Cash pooling in China

Cash pooling in China

Call date: 25th June 2020

In this call, treasurers from Asia and EU shared their experiences with domestic and cross-border pooling in China.  This report covers : Domestic pooling, Cross border pooling, Interest rates & tax, SAFE & PBOC approvals , Entrustment loan fees, Fund flows & Banks

The call was chaired by Damian Glendinning, whose commentary appears below.

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Chairman’s commentary

As usual with China, a lively discussion with many interesting experiences. Also as usual with China, people are receiving different advice, and there does not seem to be a single rule book to follow.

Nearly everyone on the call is running both a domestic and an international cash pool, and some are running USD as well as CNY pools within the country. 

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Repatriating Cash from Brazil

Cash Repatriation from Brazil

Call date: 11th Jun 2020

Participants, comprising senior treasurers from EU, Latin America and the U.S. compared their experiences in cash repatriation from Brazil .

The call was chaired by Damian Glendinning, whose commentary appears below.

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If you would like a copy of this report, please get in touch.

Chairman’s commentary

The purpose of this call was to assess the impact COVID-19 crisis has had on cash and treasury management in Brazil.

The bad news is that, some things, such as currency volatility, administrative and tax burdens, and liquidity have got even worse than they were before the crisis. The “good” news is that this remains within the levels of what you can expect in the country – as one participant put it: this is difficult, but not much worse than usual.

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Rethinking treasury technology

This is the first part of our series on in which Damian Glendinning challenges you to rethink treasury technology! This full report comprises the first part of our series on Treasury Technology and consists of a presentation (recorded and summarised) together with the report from the two peer group discussions (between 15 senior treasurers from Asia, Europe and USA) which took place in June 2020.

RTTimage

These sessions were a little different to normal. We presented a view: treasurers generally are disappointed by the type and scope of technology solutions available to them – despite everything we have been hearing over the last 10 to 15 years at treasury conferences. Nothing too controversial there.

Our attempt at being controversial (see recording below) was what followed

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Cash Repatriation from Argentina

Cash Repatriation from Argentina

Call date: 4th Jun 2020

Participants described their company’s current approach and recent experiences with repatriating cash from Argentina and answered each others’ questions.

The call was chaired by Damian Glendinning, whose commentary appears below.

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If you would like a copy of this report, please get in touch.

Chair’s commentary

Sadly, Argentina continues to be a very difficult place to operate. The rules are complex, and keep changing. The currency keeps depreciating, and the cost of hedging it is prohibitive. Borrowing in ARS is very expensive – above 30% – and local currency loans can be difficult to obtain. This makes life difficult for companies who are losing money or who are short of cash. Life is also difficult for companies which are making money and generating cash: they have issues finding banks who are an acceptable counterparty risk and who are willing to accept ARS deposits. Even when these can be found, the deposit rate, at a now mandated minimum of 30%, is still lower than inflation. Added to the mix are the exchange controls, which make it difficult to remit cash out of the country – and can make it hard to send cash in, too.

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Real Time Treasury: Closer than you think?


Rethink Treasury II

Damian Glendinning talks to Steve Monaghan, General Partner at FinMirai and Simon Jones, chief customer officer to ClearBank and member of the CXC advisory board about the possibilities for real time treasury.

This post comprises a recording of their conversation.

Also in this series:

Rethink Treasury technology

Real time treasury – closer than you think?

Using fintech to solve a real problem.

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Cash Repatriation from India

Cash repatriation from India

Call date: 2nd June 2020

Members shared their experiences in repatriating cash from India, including, Dividends, management Fees, Royalties, Intercompany netting, domestic pooling and Mauritius structures.

The call was chaired by Damian Glendinning, whose commentary appears below.

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If you would like a copy of this report, please get in touch.

Chairman’s commentary

India has always been a difficult and highly regulated environment. However, over the past few years, a lot of treasury actions which used to be very difficult are now possible. The country continues to have one of the region’s more aggressive tax regimes – they are particularly focused on transfer pricing – and there are still many regulations which are not always clear, and change regularly, but still have to be complied with.

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Regional Treasury Centres in Asia

Regional Treasury Centres in Asia

Call date: 21st May 2020

This report covers two calls with participation from members in Asia, EU and the U.S. who describe their regional treasury structures in Asia.

The call was chaired by Damian Glendinning, whose commentary appears below.

If you would like a copy of this report, please get in touch.

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Chairman’s commentary

The participants came from a wide range of companies, with approaches which covered more or less the complete spectrum, from a highly centralised in-house bank doing all execution of transactions on behalf of local subsidiaries, to a completely decentralised operation which has a treasury presence in each entity. As always, there is no single correct answer. Common themes:

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Time to Rethink Treasury Technology

Rethink Treasury 1

Treasury is stuck. Damian Glendinning challenges you to rethink your approach to treasury  & treasury technology.

This post comprises a presentation together with a write up of two peer group discussions on the issues raised with contributions from15 senior treasurers. (all below).

Also in this series:

Real time treasury – closer than you think?

Using fintech to solve a real problem.

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Tracking Bank Exposures

Tracking Bank Exposures

Call date: 21st Apr 2020

The approaches companies take to measuring and tracking their exposure to different banks and what early warning signals they look out for. The call also included markets where formal ratings are unavailable. 

The call was chaired by Damian Glendinning, whose commentary appears below.

If you would like a copy of this report, please get in touch.

More on Bank Relationships

Chairman’s commentary

In the various sessions we have held on the COVID-19 crisis, we have heard that companies are drawing down on their credit facilities and issuing debt to ensure liquidity, while at the same time they are concerned about some banks and the ability of the banking system to withstand credit losses which could potentially occur as a result of business slowdown during the lockdown. This call was to explore these issues further.

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Re-booting China post COVID

Rebooting China after COVID

Call date: 30th Apr 2020

Members describe how their in country operations in China have recovered as the COVID citation in China eased.

The call was chaired by Damian Glendinning, whose commentary appears below.

If you would like a copy of this report, please get in touch.

Click here to view all our reports on China

Chairman’s commentary

China was the first country to lock down in response to the virus. It has also been the first one to start going back to work – at least, with a coherent response to the infection. The purpose of this call was to see how quickly business is resuming, and whether there are any ongoing impacts from the period of closure. It should be noted we did not have any participants from the industries which have been most affected, specifically travel and hospitality.

Overall, the feedback was positive:

  • Collections: these slowed down in March, often to zero. But they seem to be coming back: while customer credit risk is being closely monitored, alarm bells are not ringing.
  • Most manufacturing facilities are back on line, even if office staff continue to work from home in many cases.
  • Funding: everyone saw a reduction in their normal cash position in the country. For those who are cash rich locally, this is not a problem. Others resolved the issue by intercompany loans, using their cross border cash pools to send money into China, or leading and lagging intercompany payments. 
  • The increased use of intercompany lending raises regulatory issues: several participants reported obtaining approvals from SAFE in record time. The consensus was that the authorities are going out of their way to be helpful and supportive.
  • Logistics: there have been some issues across the board, as it has been more difficult than usual to move goods to and from factories. While this has caused some disruption, and led more than one company to reconsider the structure of their supply chain, all reported that the issues are manageable, and being managed – though concern remains.
  • Unsurprisingly, companies with export oriented manufacturing locations in China are now reporting slowdowns due to reduced demand from Europe and North America, since lockdowns have been implemented there. 
  • Direct retail sales were often reduced to zero, at least for non essential goods. However, this has been partially offset by increases in on-line sales.
  • Business continuity plans generally worked, with some inevitable learning. Predictably, any process which still depends on physical signatures (or chops in China) was problematic during the lockdown. Less predictably, some companies found themselves short of the laptops required for working from home.

Conclusion: at least in the short term, our participants report that they have weathered the storm well, and business is coming back relatively smoothly. We very much hope this continues to be the case, and that the same applies to other countries round the world as they come back on stream. Again, this discussion did not include participants from the industries which have been hardest hit, and we did not discuss the potential long term impacts, including debt levels.