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

Blog entry
By Anonymous, September 24, 2013

The AT30 meeting had its third meeting on September 18 – 19 which was hosted by Google and sponsored by Citi. There was an excellent agenda covering a wide variety of topics but the one that resonated most across the membership was on the matter of bank relationships, specifically using scorecards and share of wallet analysis’ to effectively manage those relationships. The discussion was broken into three parts beginning with samples of member scorecards and input from Citi on their views of being on the receiving end of these tools. The second part of the discussion focused on bank consolidation strategies and how these management tools play a role in those sometimes difficult decisions. The final segment was closed to the sponsor anticipating that members might have some additional thoughts to share were the sponsor bank not in the room.

Key Highlights:

  • Share of wallet trumps the report card. Members are far more likely to track the allocation of business with their banks than maintaining a report card on their performance. The report card tends to be more qualitative and anecdotal in nature, relying on input from many sources, while the share of wallet analysis is more data oriented and useful in revealing which banks have what business and determining how to reallocate that business when necessary.
  • Sharing the data with the banks. Members are divided on whether or not to share their information with their banks. Those who do expect that this action will help develop, deepen and improve those key relationships. Sharing the data communicates that the bank is important enough for the client to go to this trouble, but also communicates that the client is watching and is serious about having strong healthy relationships. Those banks who value the strategic relationship take it seriously and value the feedback. “We love to receive this feedback” stated Mike Fossaceca with Citi.
  • Ask the bank what they want. Banks have a variety of product offerings, which vary by profitability, level of competence and relevance to the client. Members and bankers agree that there should be a discussion about the business banks want most from a client. Elyse Weiner, managing director at Citi, noted, for example, that clients often assume that lockbox services is a desirable piece of business, when in fact, for a lot of banks, it is not.
  • New questions about the role of credit. It is no surprise to here a treasury practitioner say, “we award business only to banks in our credit group” or that “it is a challenge keep all of our banks happy with business.” It is for that reason that one member challenged Citi, whose practices are industry standard, on why banks always use credit as a loss leader and then clamor for the real revenue generating business. Why not simply price the credit accordingly and therefore not be so dependent on the other sources of business. This could end up in higher costs for corporates but less headaches with managing relationships.

The other big, and multi-part, discussion came on day 2 and focused on managing liquidity in highly regulated markets, specifically Argentina, Brazil and China. Citi began the session by giving a laundry list of approaches for getting money out of such countries including the use of a “netting center”, “procurement center”, a re-invoicing center” and creating “special vehicles” such as an offshore fund. The remaining discussions were led by a member who shared their experiences in all three countries.

Other topics covered included a roundtable discussion on adding value to the business units and a presentation from Oracle on their investment portfolio evolution from very conservative to a somewhat more liberal approach to investing, a shift that is driven by a fire hose of cash buildup. 

Blog entry
By mkmoore, September 18, 2013

The NeuGroup would like to thank Reval  for sponsoring the summer 2013 FX Managers’ Peer Group meeting last week, hosted by member UPS. Their anchor session mirrored a couple of member presentations on hedge reporting and metrics and dealt with risk analytics. The key theme was that not all exposures should be treated equally and in the same fashion, but rather as a portfolio of exposures. Diversification of risks and how they are correlated, or not, bring benefits such as allowing the hedger to prioritize exposures based on which hedges remove the most risk. This brought a new context to ongoing discussions on analyzing risk, reporting them accurately and optimizing hedge decisions rather than just hedging all exposures according to same formula.

Highlights of their remarks include:

  • Risk is reduced when considered together as a portfolio because of natural offsets; some exposures are riskier than others and hedging them first has disproportional benefits.
  • In contrast, “safe,” systematic layering of hedges across all exposures eliminates the opportunity for these portfolio benefits to occur.
  • Metrics like Cash Flow at Risk (CFaR) can quantify these benefits. The concept of CFaR is, however, a complex one that requires educating senior management and external stakeholders to promote awareness and comfort with the portfolio approach. Members who employ similar approaches noted that they require ongoing internal commitment and education.

Thank you to all of the FXMPG members who participated in the discussions. Your shared insights and experiences continue to drive excellence in peer knowledge exchange.

The NeuGroup’s FX Managers’ Peer Groups (FXMPG and FXMPG2) bring together senior treasury professionals with responsibility for corporate foreign exchange management to share experiences and best practices with their peers. FXMPG1 and FXMPG2 are part of 15+ NeuGroups (www.neugroup.com) representing more than 300 members at 180+ companies.

Blog entry
By mkmoore, August 30, 2013

PIMCO and TIMPG members will shed light on this and more at their meeting in October.

The Treasury Investment Managers’ Peer Group (TIMPG) will be having their 2013 fall meeting on October 22-23. The meeting will be sponsored by PIMCO, a first-time sponsor, so members are eager to hear from the bond experts at this rocky time for fixed income investors. TIMPG members have also put on the meeting agenda a number of other topics that must be seen in the context of anticipated tapering of Fed asset purchases and rising rates. These include:

  1. Asset allocation and portfolio changes. How are other members positioning their cash portfolios and what does PIMCO recommend as the ideal fixed income allocation in this market environment? Since many member utilize external managers, what flexibility are they being given to invest in what’s right for these times?
  2. Risk factor allocation. Adding to the asset-allocation discussion, the group will also explore risk factor asset allocation and decide for themselves if this methodology should replace Modern Portfolio Theory.
  3. Monitoring investment compliance. As if market conditions are not trouble enough, TIMPG members are facing tighter regulations and increasing scrutiny from investment boards and senior management. How should they be monitoring investment compliance, from system use to reporting?

These topics and more are on the minds of TIMPG members and should be on the radar screen for any corporate treasury with excess cash to invest. Other NeuGroup members may want to discuss them in the context of their groups and non-members may want to consider becoming a part of NeuGroup.

The Treasury Investment Managers' Peer Group (TIMPG) was launched in September 2004. This NeuGroup has since become the leading forum for peer knowledge exchange on cash investment practices at corporates with the largest cash portfolios.It is a star in the constellation of over 15 groups in the NeuGroup Network.

Blog entry
By mkmoore, August 29, 2013

Standard Chartered, which specializes in the Asian market, is joining the Asia Treasurers' Peer Group (ATPG) as the sponsor of the Fall 2013 meeting on October 21, 2013. The meeting is being hosted by member company Caterpillar in their Singapore offices.

Standard Chartered is the sponsor of multiple NeuGroup Network meetings, including the Fall 2012 meeting of the Treasurers' Group of Thirty 2.

"I am very pleased to have Standard Chartered Bank participating in this meeting. As a leading bank in the region, Standard Chartered Bank has been requested by the members to be a meeting sponsor. I am very pleased that they will be engaging with the group and bringing their expertise specifically on the matters liquidity management in China and their vision of the future of banking in Asia," says Bryan Richardson, Senior Director of Peer Knowledge Exchange and NeuGroup leader of ATPG.

Standard Chartered is a leading international banking group. It has operated for over 150 years and earns 90 percent of its income and profits in Asia, Africa and the Middle East.

The NeuGroup Network's Asia Treasurers' Peer Group (ATPG) brings together like-minded senior treasury practitioners in Asia to share experiences and best practices with their peers. All members are senior treasury practitioners with responsibility for Asian treasury and risk management operations at global corporations. ATPG is one of 15+ NeuGroups (www.neugroup.com) representing more than 300 members at 180+ companies.

Blog entry
By mkmoore, August 13, 2013
  • Sponsors set for FXMPG Fall meetings

  • FXMPG members select agenda topics

The NeuGroup is pleased to announce that Reval will sponsor the upcoming meeting of the FXMPG1 at UPS in Atlanta, GA, on September 10-11, and Reval and FXall will co-sponsor the September 17-18 meeting of the FXMPG2 at Thomson Reuters in New York City.

"Both companies are returning sponsors, having last sponsored FXMPG meetings in 2011. We appreciate their continued support and expert contributions to the meetings," says Anne Friberg, Senior Director of Peer Knowledge Exchange and NeuGroup leader of FXMPG 1 & 2.

Reval (www.reval.com) is a global Software-as-a-Service (SaaS) provider of comprehensive and integrated Treasury and Risk Management (TRM) solutions.

FXall (www.fxall.com) is an independent electronic foreign exchange platform, giving over 1,300 institutional clients a trading edge with choice of execution, end-to-end workflow management, and straight through processing.

Members of the FXMPG groups recently selected the main topics that will anchor the agendas at their respective meetings, and they have a few themes in common, including:

  • FX Programs "from Soup to Nuts" - an in-depth look at two members' FX programs.
  • Reporting of FX Metrics and Analytics - identifying appropriate metrics to communicate the performance and contributions of the FX function, as well as the challenge of balancing granularity and “understandability.”
  • Streamlined FX Trading for Emerging Markets – from the user and provider perspective.
  • Regulatory update - members' progress with Dodd-Frank end-user exemption and reporting compliance, EMIR applicability and cross-border complications.

As sponsors, Reval and FXall will weigh in on topics such as FX trade execution in emerging markets, regulatory update and derivatives reporting, as well as add their perspectives on other agenda items.

The NeuGroup’s FX Managers’ Peer Groups (FXMPG1 and FXMPG2) bring together senior treasury professionals with responsibility for corporate foreign exchange management to share experiences and best practices with their peers. FXMPG1 and FXMPG2 are part of 15+ NeuGroups (www.neugroup.com) representing more than 300 members at 180+ companies.

Blog entry
By Anonymous, July 26, 2013

The AT30 peer group has voted and conferenced and developed their agenda for their summer meeting in September hosted by Google and sponsored by Citi. The agenda includes two topics that are robust enough they are broken into two parts. The first is on the matter of managing bank relationships. Bank partners are some of the most important relationships for any business and the global shifts in regulations and capital requirements are influencing the playing field. Selecting and effectively managing the right ones is a critical role for treasury. This session will focus on the managing portion of that equation and include discussions on bank scorecards and allocating treasury’s wallet.

The second portion of this session takes a slight turn and addresses approaches to bank consolidation. Large MNCs continue to re-engineer banking relationships around the globe. In designing an optimal banking structure, liquidity optimization is usually a driver but other key considerations include costs, bank wallet allocation, counterparty risk management, and supporting the needs of the operating business. This session will address how companies are making those determinations and approaches they are taking for execution. In addition to member views on these matters, the group will also hear the perspectives from Citi, the meeting sponsor.

Another big topic is liquidity practices for emerging markets. The group settled on a first round discussion specifically on Argentina and Brazil. It’s good news and bad news but Latin America is no Europe. Good in that it’s not stuck in the muck of economic doldrums. Bad in that it does not have the sophisticated financial solutions for pooling and repatriating cash. This session will discuss how members are approaching this challenge and what solutions banks may have to help.

Part two shifts to Asia with a specific focus on China and some new government initiatives for easing currency controls. China is on a quest to internationalize its currency and turn Shanghai into a global financial center on par with New York, London and Hong Kong. Fortunately, they are realizing that to do that you can’t keep everyone’s money locked up in your country. Consequently, the doors for getting cash out are starting to open and companies are lining up to get in on the action. This session will address the various pilots being sponsored by SAFE and the PBOC that allow companies to move currency more freely across the border.

Other topics of interest include 1) developing an optimal investment policy that will be led by Oracle, 2) how treasury can add value to the business led by Best Buy and 3) a follow up session on treasury management systems. The last meeting included a session focused exclusively on SAP treasury and its benefits and shortcomings. This session will focus on the other side of the discussion for those members who are steering away from SAP’s TMS solution and their reasons why.

Blog entry
By mkmoore, July 10, 2013

Bank Mendes Gans (BMG), a subsidiary of the Dutch bank ING, is joining the European Treasures’ Peer Group (EUROTPG) as the sponsor of the Fall 2013 meeting on November 21, 2013.

BMG is returning as a second-time sponsor of The NeuGroup. “We are delighted to welcome BMG back as sponsor. BMG’s first collaboration with the NeuGroup was through its sponsorship of the Global Cash & Banking Group (GCBG) in 2007 at Amgen in Thousand Oaks, CA,” says Anne Friberg, Senior Director of Peer Knowledge Exchange and NeuGroup leader of EUROTPG.

BMG is a niche bank specializing in intercompany netting and cash pooling and is a recognized world leader in cross-border, multi-currency notional pooling. It has been serving multinationals in this capacity since the 1960’s, starting with Dow Chemical (once a substantial shareholder), which essentially outsourced its netting and cash pooling to BMG to help launch the original platform. Notional Pooling was a topic of interest at the most recent meeting of the EUROTPG, and the group will have a full session dedicated to it at its upcoming autumn meeting. BMG will co-present on the pooling theme with its client, EUROTPG member United Parcel Service (UPS).

The NeuGroup’s European Treasurers’ Peer Group (EUROTPG) brings together like-minded senior treasury practitioners in Europe to share experiences and best practices with their peers. All members are senior treasury practitioners with responsibility for European treasury and risk management operations at global corporations. EUROTPG is one of 15+ NeuGroups (www.neugroup.com) representing more than 300 members at 180+ companies.

Blog entry
By Anonymous, June 07, 2013

The Engineering and Construction Treasurers’ Peer Group had their seventh meeting this week which was sponsored and hosted in New York by founding sponsor BNP Paribas. The meeting agenda covered a wide range of topics including fraud, inter-company transactions, treasury dashboards, economic and bank market update, doing more with less – comfortably, and a member profile. The following are a few highlights from the discussions:

Dashboards – what you want them to see. Dashboards have a variety of purposes including tracking key metrics and data points, reporting within treasury, reporting to executive management and showcasing treasury. What gets included in a dashboard is dependent on ease of access and reportability. But the key content should be a mix of what the audience wants to see and what the author wants the audience to see. Common data points include tracking of cash balances and cash flow (ideally by entity and/or region), debt capacity and utilization, counterparty exposure, and contingent obligations such as LC’s, corporate guarantees and acquisition contingencies.

Credit – “It’s here. It’s cheap. Do it”. That was the summary statement by Renaud-Franck Falce with BNP Paribas regarding the state of the bank credit markets. His exhortation was to take advantage of the cheap liquidity and lock in your credit needs for as long and as low as you can. There is considerable bank appetite for revolving credit, letter of credit lines and bridge loans. But there is less appetite for term loans. The one caveat is that banks are signing up for lower commitment levels requiring more participants in the syndications.

Balancing Security with BCP. Most members have experienced some element of fraud in their treasury, some with actual monetary losses. The group had quite a discussion on their experiences with creative fraudsters who have been successful at penetrating the fortresses of large corporations. Breaches covered the gamut of old fashioned cooking the books to intercepting passwords into bank systems and transferring money. One operational challenge that surfaced is balancing precautions with the need for business continuity planning. Some members have elected to disallow anyone from accessing bank systems from outside the office (such as from a hotel or coffee shop), believing the risk is too great that login credentials will fall into the wrong hands. However, many companies rely on employee laptops to conduct treasury business in the event the office is disabled. One solution that surfaced was to have people in other offices trained to intercede in the event of a corporate site disruption.

Members will be meeting again in October in Chicago and expect to have an in-depth discussion on the cross-border currency pooling opportunities developing in China.

The Engineering & Construction Treasurers’ Peer Group started in 2010 as a suggestion of BNP Paribas who believed this industry would benefit from being part of a NeuGroup.

Blog entry
Google, M&A, Merck, TMANY
By mkmoore, May 31, 2013

The NeuGroup discusses M&A at 2013 New York Cash Exchange; four steps to ensuring M&A succeeds after the deal is done.

One of the most important keys to the success of a merger or acquisition is how quickly and efficiently the target’s processes and procedures can be integrated into the processes of the purchaser. And while there is no one-size-fits-all approach to integrating a newly acquired finance team into the current program, there are some general guidelines treasurers can follow.

This was the topic of a recent session facilitated by the NeuGroup at the Treasury Management Association of New York’s (TMANY) 2013 New York Cash Exchange conference. With the NeuGroup’s Global Cash and Banking Group members Google and Merck weighing in, practitioners were shown the steps they can take to make integrating a new company a smooth and successful process.
One step at a time
The panel described four major steps to follow in the creation of an M&A integration playbook, including the definition of the integration strategy, naming the integration team members and their specific roles and responsibilities, creating a detailed questionnaire of appropriate process questions and identifying specific milestones for success. 

In defining the strategy, treasurers should always create – in as far advance is practical – a robust, standardized list of critical questions that must be answered within the first few days of the acquisition. These might include questions regarding policies, acquired company philosophy, banking structures and account access, as well as the acquired company’s approach to cash management. Also, defining roles and responsibilities is crucial. This leads to step two: identifying the integration team.

Naming team members is critical as it will give them – the sponsors, integration and functional leads – more time to prepare. That prep might also include other questions, which is step three, like identifying bank signatories, types of bank accounts and who has access, how daily cash is handled and some investigation of what investments are currently outstanding.

Finally, stick to the playbook. While this might fall under the heading of a “the best laid plans…” scenario, executing the playbook with as few deviations as possible is best. Most importantly, execute the critical, balance-sheet affecting parts of the plan: cash, board approvals, and banking. And while having the team named ahead of time, do not hesitate to seek assistance when necessary.
On behalf of The NeuGroup, we would like to extend a special thank you to Ronni Horrillo and Kristen Clavel from Google, and Cheryl Rabito from Merck for their time and excellent contributions to the panel discussion. 

Blog entry
By thoward, May 28, 2013

We thank all the participants at the Internal Auditors’ Peer Group (IAPG) meeting on May 15-16 at HP in Palo Alto. A special thanks goes to MetricStream for their support and presentation on GRC. Judging by the opening session discussion, the internal audit function continues to evolve and expand – sometimes to areas that make auditors less comfortable. In some instances, members have added an advisory role to their mandate. But for some this raised the question of when is one an auditor and when an advisor? Are they mutually exclusive? If an advisor, are you an auditor at the same time? Depending on the company, that answer varies. For some it’s the size of the issue: if it’s a big mature issue, you’re an auditor; if it’s a simpler process – say, pointing out the potential issues of an upcoming project – then it’s advisory. This tension ran through out the meeting, as it often does at IAPG sessions.

Further meeting highlights included:

  • Audit universe continues to expand. One member presented on how they are managing the continued expansion of the audit universe, which continues to expand at a rapid clip. The company’s current coverage structure had to change to keep up. Therefore, it adopted a new approach: American Process Quality Control (APQC), which was designed from a manufacturing standpoint but can be used for audit. The benefits are that APQC is a timeless process that won’t change based on organizational changes or on the size of the audit universe.
  • ERM still pinch point. One of the outcomes from a lively discussion on enterprise risk management was that there is still a question of how much involvement and/or ownership there should be when it comes to IA and ERM; most group companies it seems adhere to the IA as “third line of defense” model. At one company, however, IA oversees ERM, where the chief audit executive is “more than a program manager” when it comes to managing who actually owns the risks (this was in response to one member who said at his company, the business units own their risks and he feels he’s the program manager).
  • GRC tools used for proactive risk-based audits. MetricStream presented on the end-goal for Internal Audit to leverage technology to harness Big Data and provide a framework for collaborative risk assessment across functions. Members are closer to the starting point of using GRC tools for more proactive risk-based audits, however, as very few make use of GRC functionality outside of their audit functions.

Thanks again to all IAPG meeting participants for your active contributions to the meeting sessions. We look forward to our next meeting scheduled for October 28-29.

 The Internal Auditors’ Peer Group was formed in March 2006 to serve chief audit executives at IP-rich MNCs. The IAPG joins our Corporate ERM Group to serve more comprehensive risk managers in the NeuGroup Network.