What's Neu - News from the The NeuGroup Network of Peer Groups

Blog entry
By aorwick, April 18, 2018
How should a global company design its FX risk management program to protect its business from the impact of foreign exchange fluctuations?
 
With FX in flux, there is continued debate over the ideal organizational structure for achieving the best results in managing risk. The vast majority of NeuGroup members favor a highly centralized model that increasingly takes advantage of better reporting and forecasting processes, enabled by technology to support hedge decisions. 
 
But does that mean the same number take a portfolio approach to hedging, one which nets out global exposures to hedge as little as possible, or one that considers earnings at risk and hedged exposures are chosen based on maximum risk reduction? Not at all. In fact, there’s a good deal of variance. Some NeuGroup members hedge exposures individually, while others use sophisticated value-at-risk models and manage risk to within well-understood tolerance levels. 
 
Where along this spectrum is eBay, and why? Look for Shan Anwar – NeuGroup member and Director of FX for eBay – to share his risk management philosophy with Senior Director Anne Friberg at next month’s San Francisco Treasury Symposium. Mr. Anwar will touch on how the business drives exposures, policy and objectives, hedge decisions and instrument choices, and how this all ties into results, metrics and compensation. 
 
The 29th San Francisco Treasury Symposium, taking place May 18, will feature top-level corporate treasury insights from the world’s leading companies based in the Bay Area. Don’t miss Anne Friberg as she leads Session 5B, covering FX strategies to address real world risk management challenges.
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Blog entry
By thoward, April 16, 2018
New tax law could bring brain pain before companies figure it all out.
 
Tax reform passed at the end of 2017 gives big benefits to corporations and especially multinationals. However, tax and treasury departments face major headaches on how to apply the hastily produced law. 
 
Although the idea of tax reform has been discussed for years, the Republican-led Congress produced the major legislative package—the Tax Cuts and Jobs Act—in seven weeks, and President Trump signed it into law on Dec. 22, 2017.  The unprecedentedly quick process has resulted in a law creating interpretative uncertainties and potentially unintended consequences. Read more here.
 
It’s a melding of the acronyms. SWIFT recently announced it has reached an agreement with SAP to allow corporate clients of the business-software giant’s S/4HANA ERP offering direct access to the global messaging service’s vast network of banks, without intermediaries or the operational challenges of an in-house solution.
 
Depending on the complexity of the corporate customer, connecting to SWIFT directly or via a service bureau can take between three and 12 months. Under the agreement with SAP, its S/4HANA customers essentially have immediate access to the messaging network to connect with more than 11,000 banks worldwide. Companies can choose between an embedded connection to the SWIFT network, and bank connectivity through their usual banking partners. Read more here.
 
Meanwhile, the leveraged debt market shows signs of approaching the later stages of the credit cycle, but the trend in recent years toward looser debt covenants should give borrowers more flexibility and time to manage their debt obligations.
 
Looser terms combined with the surge in refinancing activity in 2016, which extended borrowers’ maturities at historically low rates, will soften the blow for leveraged borrowers during the next contraction of the credit cycle, according to a recent report by Fitch Ratings. Read more here.
 
For over 20 years, iTreasurer has delivered intelligence for treasurers. Based on exclusive access to senior treasury executives who are members of The NeuGroup Network of treasury peer groups, iTreasurer takes their real-world experience to produce articles, case studies and reports that are specifically meaningful to treasury best practice. www.iTreasurer.com.
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Blog entry
By aorwick, April 13, 2018
NeuGroup brings its expertise to Stream 2 at the EuroFinance conference on Strategic International Treasury in Miami on Tuesday, May 15. 
 

Today’s treasurers rely on data and technology to generate strategic value, boost revenues and save on process, compliance and regulatory costs. But that same technology also creates some of treasury’s biggest challenges. Technological change demands that your role be constantly evolving and pushing boundaries to unlock opportunities and drive business growth. Meet with Senior Director Anne Friberg and members of the NeuGroup Network throughout EuroFinance to exchange ideas on vital treasury updates and strategies for maintaining best practice globally. 
 
 
To kick things off, connect with Douglass Tropp – Corporate Treasurer at Booking Holdings and NeuGroup member – for a session entitled “Treasury’s Two-Way Street: What Are You Worth to Your Banks? And What Do You Get in Return?” Despite the advances in treasury technology and bank connectivity, few treasurers have access to a consolidated view of accounts with their banks and its value to the bank or the dollar number for annual revenue. Mr. Tropp has distilled insight on how to maintain relevance as a client, not only to access core products and services, but also to ensure you are high up the list when it comes to information requests or issue resolution.
 
And later, Pradipto Bagchi – VP & Assistant Treasurer of Allergan and NeuGroup member – leads a session entitled “Refinance or Wait? How to Play the Tipping Point.” A record $2 trillion of U.S. corporate debt comes due in the next five years, with industries such as telecom and energy having especially significant refinancing needs. Does it make sense to refinance existing facilities now, even if they have two to three years remaining? And what cost-effective hedges are available for those who would rather buy protection against a surprise curve steepening than incur the costs of balance sheet restructuring today? Mr. Bagchi will give his take. 
 
In addition to these sessions, Ms. Friberg will oversee talks on cybersecurity, the changing face of global cash management, centralizing currency and managing rising rates and investment risks.
 
To register for the conference, visit https://goo.gl/xb5Amr.
 
For more than two decades, NeuGroup has lead the way in peer knowledge exchange for treasury and finance professionals. With an unrivaled network of 18 invitation-only peer groups, NeuGroup facilitates more than 30 face-to-face meetings that connect peers, exchange knowledge and distill discussions. These face-to-face interactions, coupled with formal benchmarking, inform actions, transform practices, and enhance careers for the 440 members of the NeuGroup Network. Find out how you can connect at www.Neugroup.com.
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Blog entry
By jneu, April 11, 2018
US regional bank treasurers face a new world with deposits as rates continue to rise.  
 
While the ability of President Trump and a Republican Congress to move the needle further on bank regulatory reform before the midterm elections remains in focus, the dominant topic for exchange at our Bank Treasurers’ Peer Group 14th Annual Meeting on May 9-11 in New York will be what’s being called “deposit dynamism.”
 
Beyond betas. For the last several years, the focus of our deposit discussions has been on betas, which are just one element of modeling deposit behavior. The topic remains important, as the Fed signals more rate raising under a new Fed Chair who may hold press conferences after every meeting (meaning, perhaps, more opportunities to discuss fed-funds rate increases). However, deposit balance sensitivity to interest rates (betas) is not the only area of interest today. Banks are trying to look at deposit modeling and analysis more holistically, since there are more dynamics at play, as indicated by the fact that depositors have not churned as beta models have predicted—at least, so far. 
 
Reflecting new market dynamics. “Deposit dynamism” as one member put it, entails modeling deposits to look at flows based on pricing or environment changes as well as rate sensitivity. We are in uncharted territory regarding monetary policy, which is just one new market dynamic; and with rising competition from new players for deposits and competing “funds,” it’s time to take a broader look.
 
What models are being used? Accordingly, we will compare the models larger banks tend to use that are developed in-house with vendor-provided solutions. Novantas has been invited to share insight, including on some of the models it has developed. 
 
What a deposit review tells us. Next, we will assess the deposit review process, using a member example of a project undertaken with EY, to determine what inputs and outputs are most relevant for a given institution. We also will discuss where in the organization deposit modeling is done and the level of satisfaction: great, average, lousy? 
 
Morgan Stanley, returning as annual meeting sponsor, will provide added insight, too, including analysis by its Chief US Economist Ellen Zentner on the direction of rates, the latest views from the firm’s bank analysts on what’s driving bank value and what questions banks should be prepared to answer. Members of Morgan Stanley’s treasury staff will also be on hand over the course of the meeting, as in past years, to participate in the exchange with member treasurers. Catch up on everything you missed from the last meeting here. 
 
We look forward to connecting with our regional treasurers to exchange knowledge on making deposit modeling and analysis more dynamic, as well as other topics—and to distilling that knowledge into insight that everyone can use to succeed.
 
For more than two decades, NeuGroup has lead the way in peer knowledge exchange for treasury and finance professionals. With an unrivaled network of 18 invitation-only peer groups, NeuGroup facilitates more than 30 face-to-face meetings that connect peers, exchange knowledge and distill discussions. These face-to-face interactions, coupled with formal benchmarking, inform actions, transform practices, and enhance careers for the 440 members of the NeuGroup Network. Find out how you can connect at www.Neugroup.com.
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Blog entry
By bshegog, April 10, 2018
The Corporate ERM group will meet in early May at Marathon Oil in Houston to drill into a wide-ranging number of issues on the minds of enterprise risk management professionals at multinational corporations. Here’s a quick look at what’s on tap after members discuss their projects and priorities:
 
Dance Moves: Dr. Paul Walker of St. John’s University will give another lesson in his series on how companies can turn the “clunky dance” that risk and strategy groups often perform into something resembling a smooth waltz. Underlying the new choreography is a commitment to improving the detection of risk and uncertainty embedded in strategic choices. And we’ll review how organizations view the challenges of uniting risk and strategy, and discuss the best practices to address them. Later, a member will share with the group work done with Dr. Walker involving how to measure and anticipate the risks of unforeseen and surprising events. Call it a black-swan workshop.
 
Back to B-School: Remember those Harvard Business School case studies? We’ll close the strategy discussion with a workshop where members work through a case study to see what risks could have been avoided and how the situation should best be handled. We’re looking forward to hearing varying perspectives and opinions as members make the case for their take on the topic.  
 
Risky Business: On day two, we’ll tackle how members organize and frame risk, select which risks to analyze (what’s the right number of risks?) and we’ll discuss what other internal teams can support the risk mitigation effort. Later we’ll explore what it takes to have a world-class risk program and which metrics should be used to judge the success of ERM groups. How can programs grow more robust? Read more about risk framing here. 
 
As always at NeuGroup meetings, members will have plenty of time for off-line and informal discussions when they can connect, compare notes, exchange knowledge and, perhaps, discuss their dance moves. 
 
For more than two decades, NeuGroup has led the way in peer knowledge exchange for treasury and finance professionals. With an unrivaled network of 18 invitation-only peer groups, NeuGroup facilitates over 30 face-to-face meetings to inform actions, transform practices, and enhance careers for more than 400 members from across treasury and finance functions, covering multiple industries and global regions. Visit www.Neugroup.com for more information about peer groups and www.iTreasurer.com for content and news.
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Blog entry
By thoward, April 09, 2018
They’re in demand when rates are low and also when they begin to inch up.
 
Since the implementation of money market fund reform in 2016, which included gates, fees and a variable net asset value regime, prime institutional money market funds have withered. They have made a comeback, but not to their glory days. Another reason they have shrunk is because a host of investment alternatives have entered the market over the last several years. One of those alternatives is separately managed accounts.
 
SMAs have long been viewed as a solution that can enhance yield, provide control, and add diversification and flexibility to a corporate liquidity portfolio – and also as a decent alternative to money market funds. In its basic form, an SMA is a portfolio of securities that can be managed to a set of unique investment guidelines tailored to meet an organization’s needs. So, with an SMA, the manager has the ability to customize the strategy by identifying the appropriate maturity profile, sector, currency, and credit risk that are aligned with an organization’s investment policy and liquidity needs.
 
According to Fitch Ratings, assets in SMAs are estimated at $400 billion and it cites Federated Investors data as one sign of their popularity. Federated reports 97% growth in money market separate accounts between 4Q 2015 and the second quarter of 2017. Fitch expects “continuing growth in SMAs as investors are likely to re-evaluate their cash needs and move money out of government funds to higher yielding products.” Read more here.
 
Meantime, companies need a bit more structure when it comes to asset allocation. According to NeuGroup Peer Research, companies don’t have a systematic framework for capital allocation models nor clear indicators of which hurdle rates to use when. Although at some companies the capital allocation model may reside only in the head of the CFO, NeuGroup found in pre-meeting surveys across a wide variety of groups that the old reliable capital asset pricing model, using a company’s own beta, is the most common method to calculate its weighted average cost of capital (WACC). About one in five use their WACC for all hurdle rates while half use WACC in combintion with other evaluation methods. Read more here.
 
For over 20 years, iTreasurer has delivered intelligence for treasurers. Based on exclusive access to senior treasury executives who are members of The NeuGroup Network of treasury peer groups, iTreasurer takes their real-world experience to produce articles, case studies and reports that are specifically meaningful to treasury best practice. www.iTreasurer.com.
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Blog entry
By amichels, April 05, 2018
Banks like Deutsche Bank on the cutting edge of the digital revolution don’t view fintech innovators as competitors but as clients and partners. 
 
Fintech companies have become key forces in the digital transformations sweeping through banks and corporate treasury departments across the globe. Understanding how banks are now collaborating with and serving fintechs instead of just competing against them will help finance professionals assess new possibilities. Any department hoping to leverage the power of the cloud, APIs, blockchain and other components of fintech will benefit by learning how Deutsche Bank is cultivating relationships with fintechs that may soon bring about bonds sold on a blockchain and other transformational applications. 
 
This Spotlight Feature examines how Deutsche Bank is partnering with fintechs to develop solutions that will help treasury and finance, while the bank also helps fintech clients like Payoneer and Hyperwallet revolutionize the cross-border payments business.
 
Read this free report to:
• Learn how Deutsche Bank has enhanced its payment products for treasury by partnering with a fintech, and hear other ways treasury is benefiting from banks collaborating with fintechs. 
• Find out why fintechs whose solutions have reduced costs and settlement times in cross-border finance, an area banks used to dominate, are now clients of Deutsche Bank and other institutions.
• Learn why understanding buzzwords like blockchain and APIs may be less important than understanding how fintech can help corporates better manage data and confront issues including compliance and regulation.
 
For over 20 years, iTreasurer has delivered intelligence for treasurers. Based on exclusive access to senior treasury executives who are members of The NeuGroup Network of treasury peer groups, iTreasurer takes their real-world experience to produce articles, case studies and reports that are specifically meaningful to treasury best practice. www.iTreasurer.com.
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Blog entry
By thoward, April 05, 2018
Blockchain is the “it” tech of late. And while it still has a way to go for corporations, there is a lot of excitement about its prospects: for supply chain, for cross-border payments, for smart contracts, for accounting and audit, and for inventory. It’s a revolutionary technology for which the opportunities seem endless.
 
But on page 1 of this month's iTreasurer we take a look at its possibility as a hedging tool. There have been a few blockchain derivative trading platforms but the latest, from swap execution facility trueEX, is a regulated derivatives marketplace for digital assets, which is aimed at bringing confidence and transparency to a market that institutional investors have mostly sidestepped. One hurdle is liquidity.
 
“Institutional investors and commercial partners are ready for a regulated and liquid marketplace to gain exposure to and hedge these increasingly important digital currencies and commodities,” says Sunil Hirani, founder of trueDigital Holdings, an affiliate of trueEX, in a release announcing the launch. “But the marketplace is sorely lacking the necessary foundation, infrastructure and platforms that institutional investors have come to expect in other important markets.”
 
So while it’s likely not ready for prime time, the foundations are being poured and treasury should keep an eye on it.
 
In our “Anticipated Exposures” section on pages 4-5, iTreasurer discusses why treasurers should stay away from Venezuela’s recent cryptocurrency offering, the "petro." There’s also a look at SWIFT’s gpi initiative, which claims to reduce crossborder payments to a few minutes. Finally, according to NeuGroup research, repatriated cash will more likely go to paying down debt rather than the stock buybacks that seem to get all the headlines.
 
On page 6, we look at how the first-year chairman of the Commodity Futures Trading Commission, J. Christopher Giancarlo, is changing the way the agency performs its job of monitoring the markets and implementing new rules and regulations. One initiative will focus on identifying areas where regulations can be simpler, more coherent and more understandable.
 
This month’s NeuGroup peer group meeting brief provides a peek at what was discussed at the Technology Group of Twenty gathering, which was held in San Francisco and sponsored by BNP Paribas. During the meeting, members held several thought-provoking discussions on topics that included treasury transformation, constructing an FX risk policy, treasury’s sometimes complicated relationship with the tax team, acquisition finance, hurdle rates and credit ratings.
 
On page 12, we take a look at how fintech companies have become key forces in the digital transformations sweeping through banks and corporate treasury departments across the globe. In this story, iTreasurer examines how Deutsche Bank is partnering with fintechs to develop solutions that will help treasury and finance while the bank also helps fintech clients like Payoneer and Hyperwallet revolutionize the cross-border payments business.
 
Finally on page 15, we examine how the Depository Trust & Clearing Corp. (DTCC) will now permit nonfinancial lenders to borrow via the repo market. This could potentially provide corporates with a way to diversify short-term funding sources.
 
For over 20 years, iTreasurer has delivered intelligence for treasurers. Based on exclusive access to senior treasury executives who are members of The NeuGroup Network of treasury peer groups, iTreasurer takes their real-world experience to produce articles, case studies and reports that are specifically meaningful to treasury best practice. www.iTreasurer.com.
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Blog entry
By bshegog, April 04, 2018
The Treasury Investment Managers’ Peer Group 2 (TIMPG2) gathers next month at the San Francisco offices of host and sponsor DWS (formerly Deutsche Asset Management). Tax reform and rising interest rates will be among the key topics at the meeting. 
 
Big Picture: Setting the stage and dissecting tax reform and other issues of interest in Washington will be Frank Kelly, Deutsche Bank’s managing director & global coordinator, public affairs. Joining Mr. Kelly will be Josh Feinman, chief global economist at DWS, to discuss the global economic realities that investment managers are facing. Against this backdrop, members will have the opportunity to share with each other plans for capital structure and allocation in the wake of tax reform.
 
Smaller Picture: Then we’ll shine a light on investment portfolios, and members will hear from DWS sector specialists how funds should be allocated, given that many members are the recipients of newly repatriated cash. Members will also review some portfolio benchmarking data from the annual member survey. It is always helpful for members to see what other corporations allow under their investment policies and which sectors members are choosing to invest in. Closing out the day will be the member open forum, a great chance for members to address questions not on the agenda. Read more about investment strategies here.
 
Ease the Pain. A large frustration for investment managers is finding a mechanism to bring data together from multiple systems. The group will hear how one NeuGroup member company is finding relief using a solution from Tableau Software. More than ever, members will be called on by senior management to discuss and make sense of the investment portfolio. So they’ll gather in working groups to share the best mechanisms they’ve found to engage senior leadership and demonstrate the value they have added to the investment process. 
 
We’re excited about this busy day and a half. The picture has become more clear in the wake of tax reform. Now members can start to put the pieces of the puzzle together. This meeting, we hope, will give them a leg up in filling in any blank spaces.
 
For more than two decades, NeuGroup has led the way in peer knowledge exchange for treasury and finance professionals. With an unrivaled network of 18 invitation-only peer groups, NeuGroup facilitates over 30 face-to-face meetings to inform actions, transform practices, and enhance careers for more than 400 members from across treasury and finance functions, covering multiple industries and global regions. Visit www.Neugroup.com for more information about peer groups and www.iTreasurer.com for content and news.
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Blog entry
By afriberg, April 03, 2018
Members of the NeuGroup for tech treasurers, the Tech20, are gearing up for their midyear meeting, sponsored by HSBC and hosted by one of the member companies in the San Francisco Bay Area. Some of the key themes of the one-day agenda:
 
Tax Reform and Everything That Follows in Its Wake: We’ll explore the new messaging around capital structure and how to optimize it in the wake of tax reform-driven cash repatriation, as well as the appropriate use of proceeds. Other questions to answer: How will cash management structures and processes change after a global shift of cash balances and subsequent distribution and deployment? And will corporate cash investment managers even have a job anymore? 
 
A Treasury Transformation Journey: A member will give an overview of how her company’s treasury has evolved and responded to the company’s organizational transformation. And with tax reform potentially reshaping the business again, what are some key issues facing treasury now? In a post-repatriation world of no more “lazy cash,” how do you improve liquidity planning and international cash management? And how can you leverage the ERP for operational efficiencies? Read more about treasury transformation here. 
 
SAFE-ty First – Best Practices for Dealing with China’s SAFE: The treasury teams from two Tech20 member companies recently met virtually to discuss compliance with regulations issued by China’s State Administration of Foreign Exchange (SAFE) and best practices in liaising with the Chinese authority. They will share their takeaways with the group.
 
Collaborative Cyber Risk Management Solutions: A discussion on joint initiatives by the tech sector and insurance companies to develop solutions integrating technology, services and enhanced cyber insurance to make businesses more resilient. Experts from a Tech20 member company and an insurer will lead the session.
 
For more than two decades, NeuGroup has led the way in peer knowledge exchange for treasury and finance professionals. With an unrivaled network of 18 invitation-only peer groups, NeuGroup facilitates over 30 face-to-face meetings to inform actions, transform practices, and enhance careers for more than 400 members from across treasury and finance functions, covering multiple industries and global regions. Visit www.Neugroup.com for more information about peer groups and www.iTreasurer.com for content and news.
 
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