About Me

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I am deputy editor at The Banker, a Financial Times publication. I joined the magazine in August 2015 as transaction banking and technology editor, which remain the beats I cover. Previously I was features editor at Profit & Loss, an FX and derivatives publication and events company. Before that I was editorial director of Treasury Today following a period as editor of gtnews.com. I also worked on Banking Technology, Computer Weekly, and IBM Computer Today. I have a BSc from the University of Victoria, Canada.

Thursday, 5 January 2012

SEPA Gaining Ground with Corporates

05 Jan 2012

For the first time, the gtnews Payments Survey 2011 asked its global corporate readers to rank Single Euro Payments Area (SEPA) instruments among regularly used methods to make and receive payments. Although wire transfers* remain the most popular payment method across the board, just over a third of respondents said they regularly made payments via SEPA Credit Transfer (SCT), while 14 percent used SEPA Direct Debit (SDD). The results are almost identical for corporates receiving payments via SEPA instruments.

As expected, percentages were much higher in Western, Central and Eastern Europe (CEE) than in other regions. Interestingly, corporates operating in CEE reported the highest usage of SDDs, even greater than in Western Europe. Looking forward to plans within the next three years, the increase of SEPA instrument usage is expected to be substantial, with SDD usage increasing at a faster rate than that of SCT. Western Europe and CEE corporates are expected to see significant increase in usage, but even Middle East and African corporates estimate that SCT and SDD usage will increase by about 25 percent.

Almost 20 percent of corporate respondents already invested in SEPA compliance and more than 40 percent said that investment plans were already in the making, whether that is within a three-month timeline or just ‘at some point'. The majority of respondents cited ‘cost savings' as their reason for planning to or investing in SEPA, followed by ‘centralisation of payments' and ‘full SEPA adoption is inevitable, so I want to be prepared'. The reason least often cited was that ‘my bank encouraged me and helped me with the implementation of SEPA services'. Many asked for better communication about SEPA from their banking partners. SEPA is a great opportunity for banks to step up and help their corporate clients come to terms with how SEPA is going to affect their business. When asked which parties - bank, enterprise resource planning (ERP) supplier and consultancy firm - would the corporate ideally like to play a role in providing general information and services that facilitate the transition, banks come out on top. In Western Europe, 96 percent of corporates are looking to their banks to provide general information on the impact, how to prepare, what will change, etc. ERP suppliers, on the other hand, gain top spot when corporates are looking for software modules that allow SEPA transactions.

The 2011 Payments Survey results also show that some corporates are still hesitant to invest in SEPA services. When asked if their organisation planned to make that investment in the future, more than a third stated they had no plans; this translated into 20 percent of those corporates operating in Western Europe. On the plus side, these findings reflect a step forward in terms of SEPA uptake compared to the Payments Survey 2010, when almost 50 percent of corporates said that they were not planning a SEPA investment.

But what issues continue to hold corporates back? The top three reasons cited were:
• ‘SEPA is not applicable to my company'.
• ‘Need more insight on the impact of implementing SEPA in my company'.
• ‘Not convinced of the opportunities and benefits for me'.

‘Not applicable to my company' for not investing into SEPA compliance was the most cited reason regardless of geographical region. In my view, the most interesting result with regard to this question is that the reason least cited for not investing in SEPA was because ‘we are unwilling to commit without a firm end-date for existing domestic payments'. This is a conflicting result compared with a straw poll I conducted in September 2011 with European Treasurers Council members, which now numbers more than 150 members of senior level treasurers at the largest European corporates. When asked what could be done to increase the take up of SEPA, most responses mentioned the need for definite deadlines to make SEPA regulations mandatory. These findings demonstrate, in any case, that corporates must be educated - as a matter of urgency - on the fact that the forthcoming EU ‘Regulation Establishing Technical Requirements for Credit Transfers and Direct Debits in Euros' (the SEPA Regulation) will define an end date for compliance of euro credit transfers and direct debits with this legislative act. Effectively, this means that existing national euro credit transfer and direct debit schemes will have to be replaced by the SCT and SDD Schemes by 1 February 2014.

Over 300 corporate respondents participated in the gtnews Payments Survey 2011, conducted in October 2011. The full 2011 Payments Survey report, with extra analysis from gtnews' payments experts, will be available on gtnews (http://www.gtnews.com/) in January 2012.
*In the SEPA context, wire transfers are referred to as credit transfers.
 http://www.europeanpaymentscouncil.eu/blog.cfm?blog_id=20

First published on www.gtnews.com 

SEPA - Are Corporates Ready to Make the Move?

19 Oct 2011 

Although the Single Euro Payments Area (SEPA) is still a long way from being ‘front-of-mind' for corporate treasurers, some progress has been made this year. Looking back at the gtnews Payments Survey 2010, conducted in October and November 2010 with 336 corporate-level respondents globally, the picture was still quite gloomy in terms of SEPA take-up by corporates. The survey found that in Western Europe, 60 percent of respondents had not yet implemented the SEPA instruments. Of the respondents who had not yet invested in SEPA products, 46 percent said that they did not plan to invest in SEPA products in the future. At the time, Western European respondents cited the following reasons for their reluctance to engage:

• ‘SEPA does not apply to my company' (67 percent).
• ‘Not convinced of the opportunities and benefits for me / my company' (33 percent).
• ‘Need more insight on the impact of implementing SEPA in my company' (19 percent).

The results clearly showed that at the end of 2010 most corporates did not understand how SEPA would impact their business and migration to SEPA products was far down their list of priorities when trying to improve core business processes.

In September 2011, I conducted a straw poll among the members of the gtnews European Treasurers Council in preparation for a Sibos 2011 session, organised by the EPC. The gtnews Corporate Treasurers Council has over 150 members at deputy treasurer level and above from the top European corporates. Although not statistically significant, because of the small pool of respondents, I believe that it gives an indication of developing trends - and also a slightly more positive outlook to the corporate adoption of SEPA. For example, 100 percent of the respondents had heard of SEPA, which is quite encouraging. The main findings of the straw poll included:

• Almost 80 percent believe that SEPA is relevant to their company.
• 71 percent are in the process of implementing SEPA.
• 83 percent say that they can see the business benefit of moving to SEPA instruments.

When asked what could be done to increase uptake of SEPA instruments, many corporates cited the need for European Union (EU) Regulation to set an end date(s) for the phasing out of domestic payment instruments. Many treasurers indicated that establishing deadlines for migration to SEPA instruments by law is an indispensable precondition to get board approval for the budget required to implement SEPA. One corporate treasurer responding to the straw poll emphasised that clarity on end dates is also required with a view to ensure that all banks offer SEPA services. This treasurer stated: "Today we have problems with SEPA Business to Business Direct Debit. Payments bounce due to banks not participating in the scheme".

Respondents who participated in the straw poll also identified the need for more information on the SEPA project and wanted payment service providers to provide them with this information. Only 63 percent said that their bank had talked to them about migrating to SEPA Credit Transfer (SCT) and SEPA Direct Debit (SDD), which leaves a gap that the corporates are looking to their banks to fill.

The actions required to facilitate the transition of corporates to SEPA are therefore clear: the EU legislator should define mandatory deadlines for transition to SEPA payment instruments and banks should proactively seek dialogue with businesses on the SEPA change programme. It is essential that corporates take action now to prepare for migration to SEPA. The forthcoming SEPA Regulation expected to be adopted by the EU legislator in 2011 will establish deadline(s) for the replacement of national euro credit transfer and direct debit schemes by harmonised SEPA payment schemes. These deadlines could apply as early as 2013 for SCT and 2014 for SDD. SEPA impacts any business making euro payments.

http://www.europeanpaymentscouncil.eu/blog.cfm?blog_id=14

Tuesday, 3 January 2012

BAFT-IFSA's Annual Meeting to Focus on Changing Global Banking Landscape

03 Jan 12
BAFT-IFSA, the association for organisations engaged in international transaction banking, will hold its global annual meeting outside the US for the first time since its inception, putting into practice one further element of its strategy in the establishment of this global commercial banking association. The 2012 Global Annual Meeting Conference will be held at the Millennium Gloucester Hotel in London on 23-24 January.

Under the theme of 'Transaction Banking in a Changing Global Landscape', the conference is designed to provide insight into the business implications of the wide-ranging regulatory and market changes being experienced by the global transaction banking industry today. Sessions will feature chief economists, bankers, banking clients and regulators, giving attendees exposure and access to a cross-section of the international banking industry. This is a gathering of industry practitioners organised by the industry and focused on their needs.

In an interview with gtnews, Jeremy Wilson, chairman, BAFT-IFSA board of directors and co-chair Europe Council, and vice chairman at Barclays Corporate, says: "The timing of this conference could hardly be better. Europe is in a state of flux, which makes this the best possible time to gather together transaction bankers from around the world to understand the issues and the way that the evolving structure of Europe will affect them and their clients going forward.

"The banking industry is facing major change in an environment where the regulators around the world are seeking to secure the safety of the banking system. Those changes include the Basel Committee's work on trade, liquidity and leverage. There is an acute need within the industry to understand the consequences of these measures and to work with regulators in ensuring that the wider interests and health of trade finance around the world are protected," he explains.

Wilson adds: "Another area under scrutiny is in the world of payments. There is increasing interest in the security and safety of the payments infrastructure, not least to ensure that it doesn't collapse due to lack of investment at a time when there is such significant demand for investment elsewhere across the industry as a whole."

Over 225 industry leaders and executives will be in attendance for the two-day event, which will feature a wide variety of keynote speakers, panel discussions, and evening networking reception. Confirmed speakers include Sir Philip Hampton, chairman, the Royal Bank of Scotland Group, and Chris Salmon, executive director of banking services, the Bank of England (BoE).

For complete programme details click here.

First published on www.gtnews.com 

Becoming the Strategic Partner

09 Nov 2011
Risk management remains top of mind for corporate treasurers, and the question of how to be more strategically involved in business decision-making is the crux of the problem.

Risk management was one of the top issues discussed and debated at the AFP conference this year - and it continues to be something that is top of mind for corporates treasurers. In an Executive Institute session, alongside Jiro Okochi, chief executive officer (CEO) and co-founder of Reval, Mario Cornacchio, Jr, treasurer of Bose, went through steps in the evolution towards strategic risk management.

Cornacchio explained how the environment of “inconceivable” volatility and rate of change has given the treasury an opportunity to lead. Bose treasury took a pragmatic approach to risk management, and overcame the problems of needing new skills in the treasury as well as resource constraints. But, he said, the big question to answer was: are we as treasurers ready to lead?

Bose doesn’t have an enterprise-wide risk management system but is working towards partnering with other areas to assess and quantify risk, in order to consciously choose what risk it is willing to take. Cornacchio believes that it is not about being risk averse, but managing risk. He made the point that treasurers need to talk at a strategic level without letting technical jargon get in the way - but that no one should underestimate the challenge in speaking in a different way to the board.

Bose uses Six-sigma and ‘lean’ enterprise methodologies to become more efficient and to use technology better. Some examples of how they improved risk management are:
  • Innovative foreign exchange (FX) options hedging programme.
  • More advanced customer default risk assessment.
  • Hands on support in supplier risk assessment.
  • China supply concentration and renminbi (RMB) hedge.
  • Opportunistic Mexican peso hedge.
  • Data breach response plan.
Cornacchio said that a simple metric in assessing whether the treasury is seen as strategic is to ask: are the business people coming to you to help solve risk-related problems?

Treasury: How to Increase Your Profile

Cornacchio’s question raises the issue of how to get a seat at the table when it comes to more strategic questions. Eileen Zicchino, chief marketing officer (CMO), JP Morgan Treasury Services, and Deirdre Stokes, certified treasury professional (CTP), manager, corporate treasury, Kellogg Company, ran a session entitled ‘What Have You Done For Me Lately? Marketing Your Professional Assets’, which got to the crux of how to raise your profile within the organisation.

Zicchino explored the idea of ‘personal branding’ and outlined six principles of marketing which can applied to self-promotion:
  1. Know your audience.
  2. Tailor the message to your audience, whether that is your team, manager, board or external parties.
  3. There are only two stories worth telling: efficiency gains and creating value.
  4. Now you have the story, aggregate the facts, i.e. milestones in the project.
  5. Leverage the right tools, i.e. company newsletter, intranet, bylined articles for external publications, conference presentations, case studies and awards submissions.
  6. Get help from experts, i.e. marketing department, internal communications, banks and vendors.
Stokes raised her profile within Kellogg treasury by promoting its ‘Going Green is GR-R-REAT!’ programme, which won the gtnews Green Treasury Project of the Year Award and Treasury & Risk’s Alexander Hamilton Silver Award for Best Green Strategy.

The solution’s aim was to remove paper from treasury and accounts receivable (A/R). The treasury and A/R teams joined forces to meet the following objectives:
  • Eliminate many common manual processes.
  • Improve the timeliness of the bank account reconciliation process.
  • Reduce the use of paper, which in turn impacts energy use and waste generation.
The total cost savings to date is approximately US$500,000. This is an excellent project that went to the core of the company's sustainability goals.

Although it took a few weekends to complete the awards entries, the extra work was worth it, according to Stokes. She was invited to fly up on the corporate jet to Sibos in Toronto to pick up the gtnews award - and sat beside the chief financial officer (CFO). As a result, the CFO turned the project into the sustainability office as the finance department’s contribution to the corporate sustainability goals and the project was then publicised on the company’s intranet. Stokes has submitted the project to her university alumni class notes to gain visibility with her peer group.

Zicchino made the point that even if Kellogg had not won an award, Stokes and her team could have promoted the project by writing a bylined article or case study for a trade publication.

gtnews has just announced the 2012 Awards for Global Corporate Treasury - are you planning your entry?

First published on www.gtnews.com 

eBAM Top of Emerging Trends, Finds AFP Benchmarking Survey

08 Nov 2011

The AFP 2011 Treasury Benchmarking Survey identifies emerging trends and Microsoft's director of finance leads a session on shaping the supply chain.

Nearly seven out of 10 survey respondents from the middle market companies (less than US$1bn in revenue) have indicated that electronic bank account management (eBAM) is a valuable emerging trend, according to the 2011 Association for Financial Professionals (AFP) Treasury Benchmarking Survey. More than half of the large corporate respondents also felt the same.

The survey, sponsored by PNC, also identified cross-bank zero balance accounts (ZBA) as another important development.

More than 700 organisations participated in the survey, which evaluates operational issues for treasury departments that directly impact an organisation’s success. In its three-year lifespan, this is the first time the survey has emphasised bank relationship management. The main findings were:
  • Large corporates have an average of 16 bank relationships, compared to between four to eight relationships for middle corporates (US$1-5bn) and mid-market companies.
  • The average length of banking relationships is approximately 10 years.
  • Eighty-five percent of large corporates has a credit facility; this is true for 82% of mid-corporates and 73% of mid-market companies.
  • The average number of banks participating in the facility is 13 for large corporates, three and two for mid-corps and middle market companies, respectively.
  • Companies put great value on the stability of their bank group - six out of seven say that maintaining a stable bank group is important.
  • Over 70% of corporate treasurers consider a bank’s health to be a significant factor in initiating or maintaining a business relationship, and 19% changed banks last year due to concerns about a bank’s health.
Support for developments around bank agnostic facilitation through SWIFT also saw some traction, which saw an average of 22% picking this as an important trend. According to Robert Eimers, associate partner, IBM Global Business Services, who presented the results in a morning session, corporates are looking for the ability to change banks. Eimers warned that if a company is not connecting through SWIFT, or even looking into it, then it should be. He argued that SWIFT can reduce the cost of ownership by up to 80%.

Shaping the Supply Chain for Xbox’s Success

In the afternoon session Michael Trzupek, senior director of finance operations, Microsoft, went through step-by-step how he transformed the Microsoft finance department’s role from that of an accounting function, where its main function was finance reporting at the base level, to one that provides financial analysis and insight and helps to drive the business strategy.

Microsoft has a broad product portfolio. It has six operation centres in five countries, 10 Tier 1 manufacturers, 15 supply chain partners and 640 suppliers. It supplies more than 50,000 retail outlets and has 300 retail partners. It developed an integrated supply chain management programme.

Trzupek explained that the ability to sell its product to customers digitally - i.e. Xbox Live service - was changing the dynamics of the supply chain and would continue to be a challenge in the future to deliver a rich consumer experience. In 2005, Microsoft moved all manufacturing to China but maintained a hands-on factory management programme. It consolidated its supply chain.

The company believe in building and sustaining a world-class manufacturing and supply chain operation, which requires a focus on cash management, said Trzupek. He explained that the Microsoft finance team focused on:
  • Taking the cost out - looking at total cost of ownership (TCO).
  • Proactive cost curve management.
  • Optimal product lifecycle management.
  • Manage both risks and opportunities.
  • Terms, conditions and balance sheet.
After joining Microsoft from Intel, Trzupek set up to evolve the finance department into a partner for the business by:

  • Negotiating a seat at the table and increase the finance department’s influence.
  • Provide valued insight by prioritising easy-to-win victories.
  • Acting as an key contributor for the business – develop a strong partnership to deliver financial results.
Trzupek also highlighted some lessons learned, such as:
  • Outsourcing is not abdication.
  • Alignment in not consensus.
  • Scaling is more than building and selling more units.
  • Risk versus reward is exactly that – focus on risk, not reward.
  • Architecture is more than just process and tools but also strategy, people, networks, processes, tools and systems must all align.
“The finance department must have a clear vision that everyone can snap to,” said Trzupek. “This is where leadership comes into play.”

First published on www.gtnews.com 

Get Up, Get Into It, and Get Involved

07 Nov 2011

Bill Clinton, the 42nd president of the US, took centre stage at the 2011 AFP annual conference in Boston.

The annual conference of the Association for Financial Professionals (AFP) officially opened last night in Boston with the best attendance in its 25-year history: more than 6000 delegates and a record number of corporate practitioners - 2308 - have registered for the conference.

Attendees almost stampeded into the hall to hear the opening plenary keynote speaker, ex-US president Bill Clinton. Clinton’s speech focused on the challenges and opportunities presented by the turbulent times faced by the global economy. He spoke of the inequality in the world and the responsibility of corporates, not only to their shareholders, but also to their increasingly global communities and the long-term stability of the system.

When asked by Michael Connolly, chairman of the AFP and vice president - treasurer, Tiffany & Co, how he defined leadership, Clinton listed four criteria:
  1. To be able to have an accurate assessment of where the organisation you are leading is at.
  2. To have a vision for the future.
  3. To have a strategy to realise the vision.
  4. To have the ability to execute the strategy.

AFP Pinnacle Grand Prize 2011

Recognising leadership and excellence in treasury, Ontario Power Generation (OPG) outshone other competitors to win the AFP Pinnacle Grand Prize, sponsored by Wells Fargo. OPG’s treasury team executed a financing programme with unique technical features that resulted in considerable savings.

The strategy addressed short-term financing requirements during construction through a commercial paper programme and bullet bonds, rather than with traditional bank financing and amortising bonds, resulting in savings in excess of US$50m for the project.

OPG was chosen from among two other finalists: Hewlett-Packard and Microsoft. OPG, HP and Microsoft were selected as the three Pinnacle Finalists because their solutions made treasury and finance operations run more efficiently and effectively at their organisation.

Benchmarking

During his welcoming speech, Connolly made the point that during these uncertain times, it is important to get up, get into it, and get involved - borrowing from the James Brown song. He stressed the important role the AFP plays in lobbying regulators and influencing the industry as a whole, particularly through surveying its membership on significant developments in the market.

This morning I am going to the session ‘2011 AFP Benchmarking Survey Results’, which takes a closer look at bank relationship management. The presenters will discuss key metrics from the survey, the importance of credit in relationships, criteria used in selecting banking providers and will identify the characteristics top performing companies use in managing their bank relationships.

First published on www.gtnews.com