The Tech20 2012 Annual Meeting took place last week with BNP Paribas returning as sponsor for the fifth consecutive year. We thank them for their continuing support. Following closely on the US presidential election, members heard and discussed a variety of mostly sanguine opinions on the impact of the election results on the fiscal cliff negotiations, the US and global economies and US tax reform among other things. Members also discussed stress testing and contingency plans to help cope with future crisis, heard an update on the banking environment, shared thoughts on how treasury supports the business through change and reached further consensus on the importance of IT support models in treasury systems selection and successful implementations. To close the meeting, members also got some practical guidance from Ernst & Young on how they should be preparing to comply with the end-user exception and other aspects of OTC derivatives reform being implemented in accordance with Dodd-Frank.
Some key takeaways:
- G-SIB is a league table nobody wants to top. The SIFI or, now, Global Systemically Important Banks table indicating the banks that need to retain additional capital buffers is one that no bank wants to top. BNP Paribas, for instance, is pleased to have dropped one place in the November list from last October.
- IHBs are the way to go. Discussion with members on treasury support models, as well as the member session leader presentation, further validated the pre-meeting survey results indicating that in-house banks are a best practice organizational tool offering flexibility to support business change in response to new growth, tax and regulatory drivers (see related article here).
- Bring global operational efficiency best practices to new markets. Increasingly banks are seeking to fit globalized solutions, with their efficiency and leveraging of technology to the new, developing markets that MNCs are entering. Unlike in the past—where MNCs were entering these markets to conduct low-cost manufacturing, R&D or support services—current market-entry plans are often to generate new revenue with real business being conducted.
- Understand your treasury IT support model first. One member emphasized and elaborated on a point made at a prior Annual Meeting about the importance of treasury technology support in the success of a treasury management system. The support model is probably more important to the success of system than the selection of a given tool, he said. As part of their treasury end-state vision, treasurers should be realistic about what support model is sustainable.
- Tax reform will be about give to get. MNCs with off-shore cash should work together to ensure that efforts to reduce the corporate tax rate (see here) don't come totally at the expense of tax treatment on off-shore earnings.
- Start work with your board now on Dodd-Frank-related derivatives compliance. It is better to ensure this gets done in the natural sequence of board meetings before next summer.