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

Blog entry
By admin, May 08, 2013

A key theme of last week’s Corporate ERM meeting was the importance of communication.

We thank Walmart for hosting the Corporate ERM group in Bentonville, AR, this past week, where we were privileged to welcome four new members to the group and have a day and a half of very lively discussion. We appreciate, as well, the academic perspective Laurel Grassin-Drake of MIT’s Sloan School shared, including insight from her research on biases senior executives bring to discussions of risk at the board and risk committee levels.

  • Dialogue is key. One of the recurring themes of this meeting, as with many of our recent NeuGroup meetings, was the importance of communication. One of our members even said of her strategy that she is “more interested in getting the dialogue going” on risk than in focusing on any specific risk itself. Especially in ERM, you need to be able assess risk across different business units in the organization, and the best way to do this is to open communication channels. Then you can not only discover where common and possibly hidden risks lie, but also create mitigation strategies that draw on strengths of multiple BUs.

    Learn to love the numbers. Data = Romance: Establishing a baseline of ownership, size and impact of each risk is a large data-mining effort. But not all of the data need to be or even can be quantitative. Members jokingly referred to the “romance” of assigning a number to every part of risk management, but direction, outlook and a host of other qualitative factors have no less value.

Thanks again to all of the members who participated. We look forward to renewing our risk dialogue and learning more about what comes from your efforts to get more such dialogue going across your companies.

The Corporate ERM Group was formed in May 2008 to help leading risk managers at non-financial corporations, with established ERM programs, share experience and best practice in a discipline where that of financial institutions’ has dominated.

Blog entry
By jneu, May 02, 2013

We would like to thank Bank of America Merrill Lynch for returning to Tech20 as sponsor of our insightful meeting last week at HP.  Their panel on the current shareholder activist environment was the first time this topic has had a standalone session at a NeuGroup meeting and brought new context to the cash distribution discussions that have been a focal point for Tech20, as well as our other treasurer-level groups.

Speaking of cash distribution, prominent among the member priorities introduced was how best to support current cash distribution policy, especially with regard to dividends, in the wake of Apple’s announcement earlier in that week. The ante has been raised for many members as a result. The same might be said for issuing debt to help fund distributions, too, in the wake of this week’s Apple bond issue.

Other meeting highlights included:

  • Advice on the treasurer to CFO path. HP CFO and former Tech20 member Cathie Lesjak offered her insight.
  • FX management program adjustments. A case-study of a member program highlighted recent changes and focal points to prepare for a world of cleared derivatives and greater OTC market transparency.  
  • APB 23 rep practices and latest tax reform views. The increasing focus on off-shore cash makes this an important recurring topic.

Thanks to all the Tech20 members who participated in the discussions last week. Your shared insights and experiences are what continue to make the Tech20 meetings enlightening.

The Tech20 was founded in November 2001 for MNC treasurers in the technology sector. As the first NeuGroup, it is the catalyst for our unrivaled network of now more than 15 membership groups. The Tech20 remains the leading forum for treasurer-level peer knowledge exchange in tech. 

Blog entry
BNP Paribas, T30
By jneu, May 01, 2013

We want to thank BNP Paribas for hosting and sponsoring the Treasurers’ Group of Thirty (T30) meeting last week in New York. BNP Paribas is a recurring NeuGroup sponsor and we appreciate their insightful contributions to another successful meeting.

One of the major themes of this meeting was form fitting function—with your banks, with your cash and with your employees, so that your resources fit your needs.

Here are some additional meeting highlights:

  • Dodd-Frank Board approval is not so bad. For all of the hand-wringing and wondering what exactly to tell your Board ahead of end-user exemption deadlines, several members who have already taken exemption language to their boards used comments including “It was a rubber stamp,” “30 seconds of air time,” “got broad mandate,” and “do what we have to do and wait” to describe their experience. Boards seem to understand that the regulations are still unclear and are not looking for extensive explanations at this time. 
  • Systematic treasury wallet allocation. While most banks can do most things, some are better in some areas, both technically and geographically, than others. One member outlined a very systematic approach for establishing the best bank panel that works for his company: 1. Understand bank expectations; 2. Have a clear view of bank strengths; and 3. Match them to your business needs. Inviting best-in-class providers for each need will ensure healthy competition and limit overcrowding. Also, with new regulations set to alter bank relationships and drive up banking costs, it pays to be proactive in establishing and renewing credit facilities.
  • Find a rotation program that works for you. Beyond the standard junior rotation and education programs many companies offer, one member company has rotation programs for young, midcareer and senior top talent that are very popular. The programs include global postings for younger employees, longer rotations for mid-career employees, and shadowing and inter-company opportunities for executives. Treasury participates in all of these, and our member concluded that if you put in the right people, they can operate at a high level after a short time.

As with every NeuGroup meeting, success depends on the active participation of our members. With thank all the T30 members who contributed to the discussions and took the time to share their insight with their peers.

The Treasurers' Group of Thirty (T30) was formed in February 2005 to serve treasurers of large corporates from across sectors. The first of our cross-industry treasurer groups,  the T30, along with the T30-2, serves as a cornerstone for the functional and regional treasury groups that make up the 15+ groups in the NeuGroup Network.

Blog entry
By jneu, April 30, 2013

We want to thank Payden & Rygel for their sponsorship of our Treasury Investment Managers’ Peer Group (TIMPG) meeting last week at Qualcomm. As members move into a post-crisis mindset, a key meeting discussion topic was which new asset classes to consider adding as their cash portfolios grow and to counter the extended lower interest rate environment. But keeping with post-crisis lessons, another topic was how corporates should best monitor portfolio characteristics and the new risk introduced with these new asset classes.

  • Emerging market debt by comparison. Among the asset classes offered for close consideration was emerging market debt (EMD), on which Payden & Rygel had bullish views, citing increasing numbers of investment grade issues. For most investors, EMD’s appeal will be impacted by the performance of the US economy. Payden’s Senior Economist Jeffrey Cleveland, and several members of its portfolio management team walked members through how government policies will affect the US as well as impact economies globally, with a particular focus on rates and key bond market segments.
  • New asset classes stress portfolio analytics. TIMPG members also discussed the different solutions available to solve the increased need for portfolio analytics and risk management. Fortunately, more solutions are becoming available that fit corporate treasury budgets. One member cited their use of Bloomberg PORT product, as an example.

We thank our TIMPG members for their active participation. And with them, we would like to thank Payden & Rygel for their ongoing support of the TIMPG!

The Treasury Investment Managers’ Peer Group (TIMPG) was launched in September 2004. This NeuGroup for investment managers at cash-rich MNCs has since become the leading group for peer exchange on corporate cash investment practices.

Blog entry
By Anonymous, April 19, 2013

The AT30 met for the second time this week. We want to thank Cargill for hosting the meeting and for Citi’s sponsorship and ongoing support of this newest peer group. The conversations were lively and intensely honed in on two major themes, regulatory reforms and treasury technologies.  Here are some highlights:

Regulatory Reforms-A Remarkable Interest Level Surge-  Led by Citi’s Elyse Weiner, the session focused heavily on Dodd-Frank and Basel III. Movement on Basel III is very fractured and progressing slowly with ongoing work by Basel Committee Banking Supervision on liquidity monitoring, operational risk, and capital requirements.  Important topics discussed included the difference in risk between bank subsidiaries and branches which is relevant for practitioners who are keeping abreast of the financial positions of their banking partners, in the extreme case of insolvency.  

Impact of SAP Treasury Technology-A session on treasury technology focused on SAP Treasury, often a TMS by decree from IT or executive management,  and system traditionally known for its shortcomings. Members engaged in an in-depth conversation relating to SAP benefits and drawbacks notwithstanding reasons for needing to implement the SAP Treasury system in-house.  Many companies have elected SAP as their global ERP system , and pressure from IT departments has forced seasoned treasury professionals to seriously consider the functions and capabilities of SAP Treasury.  But new features and capabilities are making this once distasteful options easier to swallow.

Treasury Organizations Continues to Be a Topic of Interest-The members discussed the differences of global organization structures highlighting how they have evolved and the changes companies have made to keep up with their international expansion.  The topics of centralization and regionalization were reviewed and the once-popular notion of global centralization is being moved to the sidelines in favor of a more regionalized model, made more efficient by new technology..

The AT30 met for the first time in September, 2012. With 31 high-caliber Fortune 500 members, the group is poised for many robust meetings in the future. Google will host the next meeting in September and FedEx will host the first meeting of 2014.

Along with our AT30 members, we would like to thank Citi for their ongoing support!

Blog entry
By Anonymous, April 17, 2013

After successful stints with our FX Managers' Peer Groups 1 and 2, Chatham Financial sponsored our Treasurers' Group of Thirty 2 (T30-2) meeting last week at Sysco in Houston.

One of the major themes of this meeting was communication—with your banks and with your employees, to increase productivity and head off tension. Here are some of the meeting highlights:

  • Regulatory impacts still unfolding for treasury. The group heard from Chatham Financial on the topic of regulatory updates including the ongoing monitoring of Dodd-Frank and Basel III, and what important steps are necessary to ensure compliance.  “The CFTC is very concerned about when you’re being burdened by regulation.” This is not a joke, according to Chatham Financial’s Luke Zubrod in a discussion of Dodd-Frank. If your in-house bank is a separate legal entity, it is likely a financial entity and thus subject to clearing for market-facing swaps. However, it is also likely that the CFTC will make an exception due to the nature of the in-house construction. This amendment is a direct result of corporate lobbying, so don’t shy away from writing to regulators.
  • Dynamic talent management is critical. We discussed the importance of having a dynamic and robust talent management program in place to keep top talent challenged and engaged, and agreed that it can be difficult to paint a clear Treasury career path for people looking at careers in finance more broadly. While rotations can ensure a steady stream of people, it cannot ensure a stream of invested, specialized top talent. One strategy for attracting such talent is to make treasury skills a requirement to move ahead in finance within the company, and to explore potential career paths with new hires and top performers.
  • Pension benefits continue to change. Pension management was an important topic to members and will be followed up with a separate webinar over the next several months to discuss specific issues and concerns identified by the group. According to at least one member, a pension in the conventional sense is “a thing of the past.” As workforces become more mobile and pension liability becomes more nerve-wracking, members are increasingly freezing their DB plans, looking at cash balance plans and strengthening 401Ks.

Along with our T30-2 members, we thank Chatham Financial for their support of this meeting.

The Treasurers' Group of Thirty 2 was formed in June 2011 to complement our first Treasurers' Group of Thirty. Both NeuGroups serve leading treasurers of large multinational corporations from a cross-section of industries. Membership in the Treasurers' Group of Thirty 2 is by invitation only. 

Blog entry
By jneu, March 26, 2013

RBS makes good first impression at GCBG spring meeting.

We want to thank first-time, NeuGroup meeting-sponsor RBS for their support and contributions to last week’s Global Cash and Banking Group (GCBG) sessions at Google. RBS’ International  Cash Management and International Banking colleagues proved to be a welcome addition to the leading global banks that have supported the GCBG. Among the key takeaways from the March 20-21 meeting:

Future-proof your treasury. A session on treasury innovation was framed by technology changes in mobile platforms (mostly tablet driven) and SEPA.

  • Being more XML-fluent. SEPA helps underscore the importance for treasury managers to become “XML fluent” to successfully migrate toward an e-everything future that includes greater connectivity via SWIFT as well as compliance with euro and eventually global payments mandates.  

Shared Services to Shared Solutions.  A session on best practices in Shared-Services Centers (SSCs) also highlighted the importance of technology and the blurring governance lines for SSCs between finance and IT functions. This is part of an emerging trend toward shared solution centers emphasizing higher-value, technology-enabled solutions and not mere centralized back-office processing.

  • Will bank regulations and Dodd-Frank erode the attractiveness of In-House Banks?  New platform descriptions might also help in other ways. The growing popularity of in-house banks as a centralizing platform for corporate treasury activities has triggered concern regarding the extent that regulations aimed at mitigating the systemic risk of the banking system are allowed to spill-over to anything modeled after a bank.

In addition, we also thank our GCBG members for your participation and contributions to last week’s meeting.

The Global Cash and Banking Group is part of the functional treasury segment of the NeuGroup Network. Formed in 2004, this NeuGroup for MNC global cash managers brings together its members biannually to discuss optimizing treasury operations in response to current challenges.

Blog entry
By jneu, March 26, 2013

NeuGroups for FX managers confront new data opportunities and challenges during joint FX Summit meeting.

The key message from The NeuGroup’s FX Summit, a joint meeting of our FX Managers’ Peer Groups, was that more quality information leads to better decisions. Underscoring this message, presentations by co-sponsors Deutsche Bank and FiREapps provided numerous examples of how information, technology and analytics should be improving the hedging practices of multinational corporates.

FiREapps has built its business around helping multinationals get at better information about their FX exposures from their various ERP systems and other data sources. Wolfgang Koester, CEO and Co-Founder of FiREapps, said his company’s one word mission is “Confidence: giving treasures and CFO’s confidence that they know what their FX results impacting EPS actually will be.” In the latest release of FiREapps, there are numerous filters to perform analysis on the exposure data and drill down by currency, reporting entity and more to both better understand the sources of FX exposure on company balance sheets and validate with control frameworks that the data being drilled into represents real exposure. From there, treasury can calculate the net exposure and hedge it both more effectively and with higher levels of confidence.   

Building on this theme, Ramon Bauza, Head of Deutsche Bank’s North America Capital Markets and Treasury Solutions Risk Advisory team, presented a simple way in which FX managers can hedge a higher percentage of their exposures to reduce the earnings volatility impact of FX at less cost. Such a strategy when combined with higher confidence in the validity of exposure information would give treasurers greater confidence to boost hedge ratios above the current 50% norm today without fear of ending up over hedged. 

Not all the data trends will be positive for treasury, however. Participants also discussed the latest reporting requirements for derivatives trades under Dodd-Frank. Members expressed dismay at the administrative hassles expected in reporting inter-affiliate hedges, but also the public information that swap dealers (plus exchanges and SEFs) are obligated to disclose. Some model-based funds will invariably seek to pump this data into their super sophisticated analytical tools to try to discern patterns to help them predict and counter corporate FX trades. This helps explain the increased interest in Algo trading by corporates to help mask M&A-related and other sizeable FX transactions, especially in thinly-traded markets.  eFX platforms, including Deutsche Bank’s, will therefore be increasingly easing the automation of such trade execution strategies and the regulatory reporting and other post-trade processing required by them.

Other highlights from the meeting included a presentation on commodity risk management by one of the group’s more experienced commodity hedgers and an update on the key drivers of the global economy and their impact on the USD, plus the latest on Venezuela. We thank Deutsche Bank and FiREapps for their sponsorship along with the members of both FXMPG 1 and 2 for their active participation.

The NeuGroup's FX Managers' Peer Groups have been serving FX managers from leading multinationals since 2002. These two invitation-only membership groups meet separately twice each year to share insight, experience and benchmark approaches to topical challenges. They conduct a joint summit meeting on a bi-annual basis.

Blog entry
By Anonymous, March 08, 2013

We appreciate all who have expressed interest in our new peer group for regional treasury leaders in China that was recently spotlighted. We are pleased to announce that HSBC will sponsor the Asia Treasurers' Peer Group-China (ATPG-China) pilot meeting on May 14th, to be hosted by Cargill in Shanghai. It is a pleasure to be working with HSBC, a leading player in China, and extending The NeuGroup-HSBC relationship into Asia. We look forward to working with HSBC to build out this group with a successful pilot meeting.

The ATPG-China will complement the ATPG-Singapore group we formed in October 2011. It will also put us in closer sync with our members and other MNCs operating in China who are strengthening treasury roles there to account for this market’s importance, its complexity, and to put more strategic treasury decision-makers with the senior business and finance executives locating there to counter local competition and oversee regional and global lines of business (see also, “Where to Put Your Regional Treasury Center in Asia?”).

This group will provide a forum for treasury leaders to exchange knowledge and share insights on current topics relevant to treasury activities in and around China, as well as those planning for treasury expansion there. 

Blog entry
By jneu, February 06, 2013

The NeuGroup is pleased to welcome Daisy Alba to our team as a Director, Peer Knowledge Exchange. Ms. Alba will play a leading role in facilitation of existing NeuGroups, including the Global Cash and Banking Group, and also help us to develop new peer groups going forward. She will also serve as a contributor to agenda development across all our meetings, NeuGroup Research, the NeuGroup Exchange online member community and our International Treasurer publication.

Ms. Alba brings with her substantial practical treasury and banking experience and, as a former member of our Global Cash and Banking Group, she knows firsthand the value we offer finance practitioners with leading peer knowledge exchange.   

Prior to joining The NeuGroup, Ms. Alba was responsible for managing global cash for EMC Corporation as Director of Global Treasury Operations. She was also responsible for EMC’s overall banking and liquidity management, including overseeing the company’s approximately $10 billion in cash, integration of new acquisitions, management reporting, business controls and global cash forecasting. Before joining EMC in 2003, Ms. Alba was a Cash Management Sales Officer for Fleet Bank and a Senior International Private Banking Analyst at Bank of Boston covering South America.

Ms. Alba is an active member of the Association for Financial Professionals and a Certified Treasury Professional. She has also has served as a board member for the National Society of Hispanic MBAs. Ms. Alba holds an MBA from Cambridge College and a BS degree in accounting from the University of Massachusetts.