Hybrid Approach to Unlocking Liquidity in Challenging Markets
•
1 like•424 views
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.
Recommended
More Related Content
Similar to Hybrid Approach to Unlocking Liquidity in Challenging Markets
Similar to Hybrid Approach to Unlocking Liquidity in Challenging Markets (20)
Recently uploaded
Recently uploaded (20)
Hybrid Approach to Unlocking Liquidity in Challenging Markets
- 1. Hybrid Approach t o Unlock ing Liquidit y in Challenging Mark et s Must afa K ILIÇ R egional T reasury & Goup Insurance Manager Group T reasury Indesit Com pany Int ernat ional Business S.A. | Sw it zerland EuroFinance Int ernat ional Cash & T reasury Managem ent 19 t h Annual Conference 6-8 Oct ober 2010, Geneva Palex po, Geneva, Sw it zerland
- 2. Agenda Challenges facing t reasuries R eshaping t he t reasury Liquidit y solut ions cont inuum T rapped in cash Becom ing hybrid T he hybrid cash pooling solut ion Q&A Long w ords in short
- 3. T he new look of cash and t reasury m anagement is being chast ened by risk and shaped by globalizat ion.
- 4. In com plex environm ent s, cross-border m ovem ent s and abilit y t o hold offshore and FCY account s are highly regulat ed.
- 5. Local regulat ions oft en rest rict int er -com pany m ovem ent s or require cent ral bank approval and report ing.
- 6. T reasurers are cont inuously seek ing a bet t er plat form w here t o st rat egically m anage t he ent ire cash m anagem ent process t o increase t he int rinsic value of t he business.
- 7. It is not feasible t o have one approach for all count ries w hen it com es t o cash and t reasury m anagem ent due t o different jurisdict ions in each count ry.
- 8. R eshaping t he t reasury Harm onizat ion Liberalizat ion Cont rol Focus Cent ralizat ion Technology Out sourcing
- 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. Som e ent it ies m ay not be perm it t ed t o part icipat e int o cash concent rat ion or not ional cash pooling agreem ent .
- 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. T rapped w it h cash concent rat ion
- 13. T rapped w it h not ional cash pooling
- 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. “ 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. Freely convert ible currencies.
- 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. A financial inst it ut ion t o provide t he service.
- 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. 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. 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. 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. 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. 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. 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. Unlock ing t he liquidit y in hybrid w ay
- 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. 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. 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. 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.
- 32. 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.