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Regional Treasury

Peer Insight: EuroTPG Spring 2011 Meeting

October 05, 2011
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Post-Crisis Treasurers Take Time to Review Practices, Make Changes  

For treasurers, it has been an opportune time to review treasury practices and implement changes when the environment is less volatile than in a full-fledged crisis. This was reflected at the spring meeting of The NeuGroup’s Euro Treasurers’ Peer Group. At the meeting members considered counterparty risk guidelines and pondered working capital enhancement options. Also debated were how recent financial reform efforts will affect their treasury operations and funding costs.

1) Impact of Reform and Regs, SEPA. Costs will rise; corporates will seek alternate funding.

Key Takeaway: Capital and liquidity requirements are going up, making banks’ cost of capital and lending higher.

2) Counterparty and Settlement Risk. Taking MTM and “potential future exposure” into account.

Key Takeaway: Consider correlations between the two to avoid overstating counterparty risk. But be wary: correlations are less useful in a crisis.

3) Cash-Flow Forecasting and Systems. Companies take different positions on the necessity of cash-flow forecasting.

Key Takeaway: Without forecasting, how can treasury know how much money, e.g., interest income, is “left on the table”?

4) Working Capital Enhancement. Lean times and scarce credit force a more urgent focus on internal means of cash generation.

Key Takeaway: Companies should consider other solutions like supply-chain financing.

 



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