Hybrid Approach t oUnlock ing Liquidit y in Challenging Mark et sMust afa K ILIÇR egional T reasury & Goup Insurance Manag...
Agenda     Challenges facing t reasuries          R eshaping t he t reasury  Liquidit y solut ions cont inuum             ...
T he new look of cash and t reasury m anagement    is being chast ened by risk and shaped by                   globalizat ...
In com plex environm ent s, cross-borderm ovem ent s and abilit y t o hold offshore and    FCY account s are highly regula...
Local regulat ions oft en rest rict int er -com panym ovem ent s or require cent ral bank approval                 and rep...
T reasurers are cont inuously seek ing a bet t er  plat form w here t o st rat egically m anage t heent ire cash m anagem ...
It is not feasible t o have one approach for allcount ries w hen it com es t o cash and t reasurym anagem ent due t o diff...
R eshaping t he t reasury        Harm onizat ion     Liberalizat ion  Cont rol Focus                    Cent ralizat ion  ...
Liquidit y solut ions cont inuum                    Dom est ic Cash Concent rat ion      Dom est ic                       ...
Som e ent it ies m ay not be perm it t ed t opart icipat e int o cash concent rat ion or not ional              cash pooli...
Cash concent rat ion and not ional cash pooling    give rise t o com plex legal, regulat ory,     account ing and t ax con...
T rapped w it h cash concent rat ion
T rapped w it h not ional cash pooling
Hybrid approach t o cash pooling                           Dom est ic Cash Pooling    Cash Concent rat ion                ...
“ Hybrid cash pooling” is a syst em t hat uses t w o   or m ore dist inct cash balancing engines t o m aint ain credit and...
Freely convert ible currencies.
Legal ent it ies t hat m ust be allow ed t o open a  local and foreign currency bank account               out side it ’s ...
A financial inst it ut ion t o provide t he service.
Becom ing hybrid      ZBA        NCP     HCP                Overdraft  Part icipant         Header     Header      Part ic...
Becom ing hybrid      ZBA        NCP     HCP                Overdraft  Part icipant         Header     Header      Part ic...
Hybrid cash pooling      ZBA        NCP     HCP                Overdraft  Part icipant         Header     Header      Part...
Hybrid cash pooling      ZBA        NCP     HCP                Overdraft                                             €20 C...
Hybrid cash pooling      ZBA        NCP     HCP                Overdraft                                             €70 C...
Hybrid cash pooling      ZBA        NCP     HCP                Overdraft                                             €70 C...
Hybrid cash pooling      ZBA        NCP     HCP                Overdraft                                             €70 C...
Unlock ing t he liquidit y in hybrid w ay
What does it t ak e t o st ep up?       It t ak es t h ree t o fi v e m on t h s t o bu i l d a h ybri d en gi n e        ...
Offers a broad spect rum of benefit s    Creat es efficient w ay t o consolidat e liquidit y w it h    bet t er geographic...
Offers a broad spect rum of benefit s    Elim inat es int er-com pany loans w hile creat ing new    funding vehicle.    R ...
T hings needed t o be considered    Hybrid cash pooling prohibit ed or m ay be subject    t o recharact erized in som e co...
Long w ords in short        Cash in ex cess of w ork ing capit al at local level        no longer rem ain “ t rapped” or s...
mustafa kilic@me com
Hybrid Approach to Unlocking Liquidity in Challenging Markets
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Hybrid Approach to Unlocking Liquidity in Challenging Markets

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Hybrid Cash Pooling solution has been specifically built to meet the need of challenging markets while boosting the business and economic values of the companies. It is a system that uses two or more distinct cash balancing engines to maintain credit and debit positions of various accounts in the book of the service provider bank.

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Hybrid Approach to Unlocking Liquidity in Challenging Markets

  1. 1. Hybrid Approach t oUnlock ing Liquidit y in Challenging Mark et sMust afa K ILIÇR egional T reasury & Goup Insurance ManagerGroup T reasuryIndesit Com pany Int ernat ional Business S.A. | Sw it zerlandEuroFinance Int ernat ional Cash & T reasury Managem ent 19 t h Annual Conference6-8 Oct ober 2010, Geneva Palex po, Geneva, Sw it zerland
  2. 2. Agenda Challenges facing t reasuries R eshaping t he t reasury Liquidit y solut ions cont inuum T rapped in cash Becom ing hybridT he hybrid cash pooling solut ion Q&A Long w ords in short
  3. 3. T he new look of cash and t reasury m anagement is being chast ened by risk and shaped by globalizat ion.
  4. 4. In com plex environm ent s, cross-borderm ovem ent s and abilit y t o hold offshore and FCY account s are highly regulat ed.
  5. 5. Local regulat ions oft en rest rict int er -com panym ovem ent s or require cent ral bank approval and report ing.
  6. 6. T reasurers are cont inuously seek ing a bet t er plat form w here t o st rat egically m anage t heent ire cash m anagem ent process t o increase t he int rinsic value of t he business.
  7. 7. It is not feasible t o have one approach for allcount ries w hen it com es t o cash and t reasurym anagem ent due t o different jurisdict ions in each count ry.
  8. 8. R eshaping t he t reasury Harm onizat ion Liberalizat ion Cont rol Focus Cent ralizat ion Technology Out sourcing
  9. 9. Liquidit y solut ions cont inuum Dom est ic Cash Concent rat ion Dom est ic Cross Border Not ional Not ional Pooling Pooling Cross Border Cash Concent rat ion
  10. 10. Som e ent it ies m ay not be perm it t ed t opart icipat e int o cash concent rat ion or not ional cash pooling agreem ent .
  11. 11. Cash concent rat ion and not ional cash pooling give rise t o com plex legal, regulat ory, account ing and t ax considerat ions.
  12. 12. T rapped w it h cash concent rat ion
  13. 13. T rapped w it h not ional cash pooling
  14. 14. Hybrid approach t o cash pooling Dom est ic Cash Pooling Cash Concent rat ion Not ional Cash Pooling Cross-Border Cash Pooling
  15. 15. “ Hybrid cash pooling” is a syst em t hat uses t w o or m ore dist inct cash balancing engines t o m aint ain credit and debit posit ions of various account s in t he book of t he service provider bank .
  16. 16. Freely convert ible currencies.
  17. 17. Legal ent it ies t hat m ust be allow ed t o open a local and foreign currency bank account out side it ’s count ry.
  18. 18. A financial inst it ut ion t o provide t he service.
  19. 19. Becom ing hybrid ZBA NCP HCP Overdraft Part icipant Header Header Part icipant Account s Account Account Account s €50 CR €10 CR €10 DR €10 DR €20 DR €40 DR €20 CR €40 DR
  20. 20. Becom ing hybrid ZBA NCP HCP Overdraft Part icipant Header Header Part icipant Account s Account Account Account s €40 CR €10 CR €10 DR €10 DR €10 DR €40 DR €20 CR €40 DR
  21. 21. Hybrid cash pooling ZBA NCP HCP Overdraft Part icipant Header Header Part icipant Account s Account Account Account s €40 CR €10 CR €10 DR €10 DR €10 DR €40 DR €20 CR €40 DR
  22. 22. Hybrid cash pooling ZBA NCP HCP Overdraft €20 CR Part icipant Header Header Part icipant Account s Account Account Account s €40 CR €10 DR €10 DR €10 DR €10 DR €40 DR €20 CR €60 DR
  23. 23. Hybrid cash pooling ZBA NCP HCP Overdraft €70 CR Part icipant Header Header Part icipant Account s Account Account Account s €40 CR €10 DR €10 DR €60 DR €10 DR €40 DR €20 CR €110 DR
  24. 24. Hybrid cash pooling ZBA NCP HCP Overdraft €70 CR Part icipant Header Header Part icipant Account s Account Account Account s €40 CR €10 DR €60 DR €10 DR €10 DR €40 DR €30 DR €60 DR
  25. 25. Hybrid cash pooling ZBA NCP HCP Overdraft €70 CR Part icipant Header Header Part icipant Account s Account Account Account s €10 DR €10 DR €10 DR €10 DR €10 DR €40 DR €30 DR €60 DR
  26. 26. Unlock ing t he liquidit y in hybrid w ay
  27. 27. What does it t ak e t o st ep up? It t ak es t h ree t o fi v e m on t h s t o bu i l d a h ybri d en gi n e 6-8 w eek s 3-4 w eek s 5-7 w eek s 1-2 w eek s St ruct ure P rovider P lat form Service •P lan •Part icipant s •Docum ent at ion •Test s •Design •Evaluat ions •Im plem ent at ion •Trainings •Requirem ent s •Select ions •Ex ecut ion •Deploym ent
  28. 28. Offers a broad spect rum of benefit s Creat es efficient w ay t o consolidat e liquidit y w it h bet t er geographic coverage. Elim inat es local borrow ing needs w hile reducing corporat e guarant ees for local credit lines. Brings econom ies of scale in financing condit ions w it h increm ent al incom e st at em ent im provem ent s. Enhances cont rol of cash balance and increases it s visibilit y. T reasury can overdraw in currency of choice. Maint ain local bank account s t o serve local needs.
  29. 29. Offers a broad spect rum of benefit s Elim inat es int er-com pany loans w hile creat ing new funding vehicle. R educes or elim inat es FX and sw ap t ransact ions t o offset t he debit posit ions of t he account s. R educes num ber of operat ional t ransact ions and it s cost . No physical m ovem ent s of funds across ent it ies or account s at header account level. No change in ow nership of cash. No addit ional hardw are/soft w are on user side.
  30. 30. T hings needed t o be considered Hybrid cash pooling prohibit ed or m ay be subject t o recharact erized in som e count ries. Som e ent it ies m ay not be allow ed t o part icipat e int o hybrid cash pooling agreem ent . Occasionally requires physical m ovem ent of funds across account s. May require t he parent com pany guarant ee. Invest m ent st rat egy for ex cess liquidit y. T ax and legal opinion.
  31. 31. Long w ords in short Cash in ex cess of w ork ing capit al at local level no longer rem ain “ t rapped” or subject t o local invest m ent vehicles. Short t erm funding in t he currency of choice w it hout t he t radit ional reliance of int er- com pany loan st ruct ures. Hybrid solut ions have been specifically built t o m eet t he needs of challenging m ark et s w hile boost ing t heir business and econom ic values for robust fut ure.
  32. 32. mustafa kilic@me com

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