Treasury & FX in India

Treasury & FX in India

Call date: 28th Feb 2019

In this call, members shared their experiences of cash and treasury management in India, including : experiences with regulations, hedging, funding and cash repatriation.

The call was chaired by Rajiv Rajendra, his commentary appears below.

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Chairman’s commentary

There is the India of uncertainty due to the forthcoming election and escalating tensions with Pakistan over Kashmir. However from a policy perspective regarding business although the election has meant a slow-down in de-regulation, whoever wins the election, there is commitment to continue this process.

The other India is the India of everyday business – which continues irrespective of the headlines and the continued evolution of a massive and growing market. Everyone on the call represented companies who recognise this. As well as illustrating the commitment of companies to the India market, the call also highlighted that:

  • Documentation remains challenging and keeping track of regulation remains a problem.
  • The regulations for external commercial borrowings (ECB) have eased.
  • Companies are using both NDFs and onshore hedging but there is debate as to which approach is more efficient.
  • Repatriation of cash remains an issue

Dealing with illiquid currencies

Dealing with illiquid currencies

Call date: 20th Mar  2019

This call comprised the presentation of a proposed strategy for handling illiquid currencies, followed by a peer group discussion & feedback session covering the different approaches of the companies involved

The presentation was made by Christof Nelischer, who also chaired the discussion. The key findings are detailed below.

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Key findings

  • All agreed that a written policy is a good idea – although not all had a formal one, some were in the process of producing one, or decided to formalise their policy as a result of the discussion. 
  • Any policy should be applied flexibly, with treasury working closely with senior management and commercial to get the optimum results for the business. Flexibility should manifest itself as Treasury having some discretion as to the interpretation of illiquid currencies and policy statements.
  • Dialogue with commercial and senior management over currency issues should be ongoing, including educating supply chain and sales on the issues of illiquid currencies. Raising the topic of illiquid currencies away from a crisis shows Treasury as being pro-active and forward thinking. However, if there is a crisis – don’t waste the opportunity

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Treasury & FX in Egypt

Treasury & FX in Egypt

Call date: 12th Feb 2019

In this call, members shared their approaches to Treasury & FX in Egypt, including:

  • Access to hard currency
  • Hedging
  • International banks

The call was chaired by Damian Glendinning whose key takeaways are listed below.

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Key Takeaways

  • Egypt is a prime example of how you need a different mindset in complex countries. Two years ago, we would have just heard tales of woe and people struggling to keep basic operations running. Now, it is beginning to work again. But for how long? These countries have cycles: it is important not to despair during the difficult periods, and not to get carried away during the good ones.
  • For the time being, FX is readily available and most people are managing to get cash out.
  • International banks have a thin presence on the ground, so it is advisable to work with local ones, including banks from other Middle Eastern countries or the Gulf. These may not have the most sophisticated products or the best technology, but they are improving and they have an appetite for the region, and their capabilities are improving.
  • Hedging is a challenge, due to poor liquidity in the markets – but this situation is improving.
  • In many cases, companies are finding they get the best results in Egypt, either through running offshore or US dollar based businesses, or by going fully onshore with local shareholders, and transferring in activities from elsewhere to maximise local talent and available cash.
  • Overall, I think this is a good example of how a country which has been in a very difficult situation can improve. But I think there is a danger that our discussion may become too much of a point in time debate. Do we expect things to turn down again in the future (I do, but not for a few years). And, if so, what are we doing to prepare the company for that?

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KYC (Know Your Customer)

Here is Damian Glendinning’s  article based on our  Treasury Peer Call on KYC  (Know Your Customer) which took place on 26th February 2019.

park (9)This is an area where there is a lot of frustration, and all treasurers feel they are spending far too much time and resources on it. The situation is further complicated by a lack of consistency, and by data privacy laws, which make it difficult to collect and store the personal data of bank signatories. But the group had several interesting solutions, including how to define the data being stored so as to avoid the data privacy rules, using in-house data bases to store documents, and getting a notary to certify that they have seen all the source documents, thereby eliminating the need to provide copies again and again. There may be hope in SWIFT’s new central repository, but that does not yet seem to have the buy-in of the several of the world’s major cash management banks (*this has changed since the discussion took place).

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Treasury & FX in Brazil

Treasury & FX in Brazil

Call date: 30th Jan 2019

In this call, members shared their approaches to Treasury & FX in Brazil, including:

  • Receivables
  • Funding
  • Hedging
  • Cash Repatriation

The call was chaired by Simon Jones whose key takeaways

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Key Takeaways

  • Receivables are moving from paper to electronic, but Boletos continue to be challenging to achieve automated straight through reconciliation.
  • Capital Injections & Hedging, continues to be challenging and requires extensive planning and work to make sure there are no delays.
  • Cash Repatriation & Hedging, seems to be easier as long as documentation is correctly in place.
  • Cautious optimism for the economy in the year ahead. 

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Treasury & FX in Russia

Treasury & FX in Russia

Call date: 30th Jan 2019

In this call, members discussed their approaches to treasury, FX and cash management in Russia.

The call was chaired by Arnaud Francq  whose Key Take Outs are set out below

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Key Take Outs

  • Documentation – complex, time consuming & critical
  • Inter banks – 2 way pooling is available in theory but not at all straight forward in practice
  • Find hedging banks- operating outside to inside
  • Sanctions are very specific – details are key and need to be looked at closely

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WORKING CAPITAL Policy: manage the level? How to handle the business trade-offs?

The Working Capital Series Part I

In this recorded presentation, Damian Glendinning identifies the trade-offs that corporates need to make when establishing a Working Capital Policy.

The Working Capital Series comprises six presentations on working capital:

1.Policy: manage the level? –  How to handle the business trade-offs? 

2.How do we fund it? –  On or off balance sheet? Long or short term? 

3.Instruments – factoring, LCs, etc. – and the accounting treatment.

4.Accounting, measurements, incentives and KPIs

5.New technology and funders – internet portals 

6.Business creep –  keeping up with changes in the business model 

Notes on china

Notes on China

Call date: 22nd Nov 2018

This report comprises Damian Glendinning’s commentary on some of the issues raised in our Treasury peer Call on Repatriating Cash from China which took place on 22nd Nov 2018.

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Topics covered in this report

  • Flexibility is Key
  • Internal pooling arrangements
  • Banker’s acceptance drafts
  • Structure
  • Banking system

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repatriating cash from china

Repatriating cash from China

Call date: 22nd Nov 2018

In this call, members discussed cash repatriation from China, including: Dividends, Cross-border pooling, Entrustment loans and Euro invoicing.

The call was expert chaired by Simon Jones, whose conclusion appears below.

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Chair’s conclusion

Cash can be liberated from China. Dividends are the most robust route to doing this, but cross border sweeping is back in action and working for some corporates. Getting the right local concentration structure is important to leveraging a cross border liberation of cash offshore and can be done in a tax effective way. Invoicing cross border is an equally important topic and as businesses grow tends to become more in local currency via local entities and therefore means more potential cash in China to repatriate in the future

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Treasury & FX in Turkey

Treasury & FX in Turkey

Call date: 12th Dec 2018

In this call, members shared their approaches to Treasury & FX in Turkey, including:

  • Currency issues
  • Financing
  • Hedging
  • Credit insurance

The call was chaired by Arnaud Francq whose key takeaways are listed below.

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Key Takeaways

  • A number of participants have local distribution but import products from outside Turkey, this creates a mismatch between sourcing in EUR/USD and sale in TRY causing currency exposure.
  • Local financing is becoming very expensive, some companies are focusing on reducing local borrowing/debt as a matter of priority.
  • Hedging is becoming very expensive, in some cases, it might be easier to limit the currency exposure of the local entity and centralize hedging at HQ level.
  • Currency volatility is creating increased challenges for reporting (mark to market) .
  • As the economic conditions are becoming more challenging, some participants observed some lengthening of payment terms.
  • Increasing limits for local credit insurance is becoming more and more difficult

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