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

Blog entry
By jneu, October 16, 2012

McKinsey’s Financial Institutions Group has released its second annual review on the banking industry, encouraging banks to undergo a “triple transformation.”  The NeuGroup sees at least five ways that we can assist them as they engage in this process.

McKinsey explains “triple transformation” as follows:

Banks should aim high, fundamentally transforming their economics, business models, and culture—what we call a “triple transformation.”

First, with regard to changing the economics of banking, McKinsey notes that banks need to find new revenues:  “Growth is becoming more granular and banks must identify and mine individual areas of expertise.” On the cost side, McKinsdy finds an irrefutable case for industrialization:

To achieve sector-wide productivity improvement, banks need to embrace the changes already seen in other industries, such as automotive, starting with simplified businesses—reflecting customers’ needs—streamlined operating models with strategic sourcing and digitized processes. An entirely new culture of full process transparency and control needs to be established. The time is right for a giant leap forward, with economic pressure and technological potential creating the conditions for change. [emphasis ours]

Of course, as banks look to create more sustainable business models in the wake of financial crisis and new regulation in response, they will need to explain these new models to customers.  McKinsey suggests that:

“Business models will become more differentiated, with an increasingly important role for specialist players.”

As part of the third element, one of the more pertinent cultural transformations McKinsey recommends is dedication to true customer focus:

Banks need to redouble their commitment to creating value for their customer, ensuring transparency and meeting best-practice standards for products and services.

With this in mind, NeuGroups offer a transforming bank a strategic sourcing alternative to:

  1. share how it will differentiate itself
  2. articulate how it plans to add value for customers
  3. get input on customer needs
  4. find new revenue ideas
  5. exchange ideas on its approach to existing products and services, including how to implement best practices and cost-reducing industrialization of transaction processing without alienating its best customers. 
Blog entry
By admin, October 03, 2012

We are looking forward to the Treasury Investment Managers’ Peer Group (TIMPG) Fall Meeting on October 24-25, 2012, where members will check in with one another on how they’re dealing with the ongoing volatility and risk concerns around geographies, investments and institutions.

The NeuGroup is pleased to welcome back DB Advisors as the meeting sponsor. Operating then under the Deutsche Asset Management name, they sponsored the group’s very first meeting in September 2004. This fall’s meeting is hosted by first-time host VMware.

Highlights on the agenda include:

  • Repos and covered bonds in-depth. A deep dive into the specific structures, benefits and risks associated with repurchase agreements and covered bonds.
  • Tagging along with asset manager on EM trip. In a commentary on the risks of sovereign debt and perhaps a bit of mistrust with asset managers, members will hear a report from a member, whose assistant treasurer recently accompanied an asset manager to Turkey to learn first-hand how they perform credit analysis on emerging market sovereign debt.
  • Asset allocation update. The standing topic of asset allocation, where members review their changes in thinking and strategy since the last meeting.
  • “The Really Big Concerns.” DB Advisors will share their views on such macro events as the US elections, the fiscal cliff, and tensions in Asia and the Middle East.

As usual, the meeting should prove to be a robust exchange of knowledge between some of the most sophisticated corporate cash investors in the country.

The Treasury Investment Managers’ Peer Group is the NeuGroup for investment managers at cash-rich MNCs. It includes senior treasury professionals from 30 companies with oversight responsibilities for treasury investment management at corporates with at least $2.5bn in excess cash. The TIMPG is an invitation-only membership group that meets twice per year to exchange knowledge in person and anytime on the NeuGroup Exchange.
Blog entry
By Anonymous, September 28, 2012

We are excited about the 2013 meeting of The Corporate ERM Group when it will be hosted by Walmart at their facilities in Bentonville, AR. The meeting is scheduled for May 1-2 and is sure to include another robust agenda and a few ancillary activities such as a tour of the original Walton 5 and 10 and the Walmart visitors center and museum the evening before the meeting. Also scheduled is a tour at the end of day one of the new and highly acclaimed Crystal Bridges Art Museum which was initiated and primarily supported by Alice Walton.

Past meeting highlights

The group had its 2012 annual meeting on May 9-10 which was hosted by Archer Daniels Midland in their Chicago office. The meeting was well attended with 14 companies present. Included in the group was The NeuGroup's spotlight guest, Caterpillar, which gave an overview of their "Business Risk Management" (BRM) program. Caterpillar subsequently joined the group as a member. The meeting agenda featured the following topics:

  •  Effective dynamics between ERM, corporate strategy and the businsess units.
  •  A Glass Half Full, which was a member-led discussion on the positive side of ERM versus being viewed as the wet blanket.
  •  The ERM Makeover, which addressed how ERM programs have been modified since their inception.
  •  Defining Risk Tolerance and Appetite.

The group was also treated to an address on risk by ADM's CFO, Ray Young, as well as a fascinating floor tour of the Chicago Board of Trade at the opening bell.

Overall, it was an excellent meeting with several members saying it was the best one yet. The NeuGroup for Corporate ERM is for ERM professionals at large MNC's which have an established ERM program. To learn more about participation contact Bryan Richardson at brichardson@neugroup.com.
Blog entry
By jneu, September 24, 2012

Last week marked the first time that The NeuGroup led three group meetings simultaneously. And one of these meetings, the pilot for our Assistant Treasurers Group of Thirty, represented the successful launch of the 15th group in the NeuGroup Network. That's two significant milestones to end the summer.

A quick recap of the three meetings

Our FX Managers’ Peer Group 2 met in Silicon Valley with Chatham Financial sponsoring and shed additional light on the end-user exemption from Dodd-Frank derivatives clearing requirements and the related ISDA Protocol. The Global Cash and Banking Group met outside Dallas with J.P. Morgan sponsoring and elevated members’ realization of the impact new bank regulations will have on their banking services and product pricing. This was also a theme at the Assistant Treasurers’ Group of Thirty meeting sponsored by Citi in Armonk, NY.  AT30 practitioners for the most part have not felt the impacts yet, and several reported some counterintuitive recent pricing reductions based in part on competing bank liquidity needs in the near term. Over the medium to longer-term, however, the expectation should remain that the adverse consequences of Basel III, Dodd-Frank and related financial reform efforts across the G-20 will eventually make it harder for banks to deliver the same level of service at pricing levels MNC treasuries have grown accustomed to.  

Another issue the AT30 shared with the Global Cash and Bank Group was cash forecasting, which is getting a new round of interest from firms facing pressures on free cash flow as well as companies looking to deploy new analytics applications to the perennial problem of improving accuracy without overburdening human staff across the enterprise.  Freeing up human resources was also a key reason why enhancing treasury technology was a discussion point across all three groups.

Of course, this just scratches the surface of what was discussed at these three NeuZGroup meetings last week. We thus want to thank the participants from all three groups for their open discussion and engagement along with the representatives from the meeting sponsors. Your efforts made these simultaneous meeting and network expansion milestones possible.

Blog entry
By jneu, September 19, 2012

We are happy to have the support of Deutsche Bank as meeting sponsor for our Asia Treasurers' Peer Group meeting in Singapore on October 10-11. We have been pleased to work with Deutsche Bank in conjunction with our Tech20, GCBG and T30-2 groups this year and are excited to extend this relationship to Asia -- a region of strategic importance to all involved.

Highlights from the ATPG meeting agenda:

  • Talent Acquisition and Retention. Singapore has two percent unemployment and standards of living are improving in other regional markets such as China and India. This places a strain on treasury's HR management and has companies looking at salary and other forms of compensation.
  • Fostering a new strategic vsion for regional treasury management. The growing importance of the region should be translating into more strategic decisionmaking by MNC treasury professionals heading regional centers.
  • Supporting business growth. A prominent theme at prior meetings is revisited with a member case study on supply chain finance and discussion of specific tools members have deployed successfully to support the expansion of business iniatives in the region.
  • The evolving economic landscape in the region. Members will hear an update on the latest economic outlook, but also discuss what economic data they receive, how they use it and how they coordinate actions with headquarters.
  • Cash pooling in China. Members will discuss both pilot programs for cross-border RMB pooling and how they will fit into increasingly streamlined gobal cash pooling infrastructure.
Blog entry
By jneu, September 18, 2012

We want to say a big thank you to the FX Managers’ Peer Group members for their active participation at the FXMPG meeting last week in San Francisco. We also want to acknowledge Standard Chartered for their sponsorship and valued contributions during the meeting sessions. This successful meeting marks the start of the second-half of the NeuGroup season, which continues this week with meetings of our second FX Managers’ Peer Group (sponsored by Chatham Financial), The Global Cash and Banking Group (sponsored by JP Morgan) and launch of our Assistant Treasurers’ Group of Thirty (sponsored by Citi).

Anne Friberg, who leads the FXMPG, reports that last week’s meeting covered further ground toward understanding the recently-released final language on the Dodd-Frank end-user exemption (EUE) for clearing derivatives, as well as implementation of the related ISDA Protocol. The group also discussed the impact on their hedging programs stemming from the increased cost with these new regulations. An update on the euro crisis and possible scenarios going forward were presented by Standard Chartered and complemented with a member presentation on the latest contingency planning and actions taken. Standard Chartered also provided an in-depth look at currency issues in emerging markets, focusing heavily on China and its CNY, CNH and NDF markets. The treasury systems discussion, finally, yielded some important updates, shedding new light on two vendors in particular.

It will be interesting to see how the FXMPG2 members react to similar topics later this week.

Blog entry
By jneu, September 18, 2012

The NeuGroup is conducting an exploratory meeting for MNC treasury professionals in Shanghai on October 16, 2012. This half-day meeting will provide an opportunity for practitioners in China to exchange practical knowledge on local and cross-border treasury and banking activities and explore how the NeuGroup Network can support them in this challenging and rapidly developing environment. China treasurers from member companies including Ford, Intel, Merck and Nokia will be participating with PwC hosting.

If you have colleagues who may wish to participate, please contact Bryan Richardson (brichardson at neugroup dot com).

Blog entry
BNP Paribas
By jneu, September 13, 2012

At a reception last evening, we were pleased to see Everett Schenk, CEO of BNP Paribas North America, honored for his two decades with BNP Paribas and his role in bringing the bank to the forefront of non-US banks operating in the US. Mr. Schenk will retire at the end of the month. With his support, BNP Paribas has been a regular and valued supporter of The NeuGroup and instrumental in helping with the launch and build-out of several of our groups. We express our thanks and wish him well.

Mr. Schenk hands off to Jean-Yves Fillion, who will assume the role of CEO for BNP Paribas' North American Corporate and Investment Banking activites next month. He has been away for more than a year, serving as Head of BNP Paribas Fortis CIB, but is well-known to many of our members as a frequent participant at our meetings and a strong advocate for our groups. We are happy to have him back in New York.

We know we join many of our members in saying congratulations to both gentlemen: Mr. Schenks for leaving your colleagues wanting more and Mr. Fillion for being given the opportunity to build on the bank's success under Mr. Schenk's leadership in a market that, along with Asia, remains a strategic priority.

Blog entry
By admin, August 22, 2012

The NeuGroup’s newest peer group, The Assistant Treasurers’ Group of Thirty, will have its pilot meeting in September. This group is for assistant treasurers of large cap companies and is referred to as the AT30. It is our 15th group. Pilot participants were recently polled on a list of agenda topics to determine which were of greatest interest. The following is a summary of the results.

Given that this is the pilot meeting, members will have the opportunity to present their company’s respective treasury department structure and their personal responsibilities as Assistant Treasurers. This will provide background for a highly requested discussion of treasury technology, where members will  learn about each other’s technological infrastructure, including systems, continuity plans, plans for new implementations, challenges and suggested technologies to try.

Members also expressed some interest in the ongoing Eurozone crisis, even though the topic has been discussed and written about ad nauseum for many months. Although relegated to a lunch address, the desire to have the topic on the agenda at all indicates members aren’t ready to take their eye off this ball. Our sponsor Citi will highlight their recommendations based on what their clients in Europe and the US are doing to protect themselves.

The most anticipated session is a review of the new regulations that will affect treasury either directly or indirectly through their banking relationships, including Basel III, Dodd-Frank, MMF rules from the SEC, and CFTC regulatory changes on ISDAs and CSAs. We will have Citi’s insight on how clients are preparing for new regulations, as well as overviews from two of our members on preparations being made.

Relatedly, bank counterparty risk is a widely shared concern and is a common topic on many peer group agendas. We will have a member-led discussion on monitoring financial and operational risks of financial institutions, triggers for terminating relationships and approaches to measuring and allocating the treasury wallet. We will also discuss the technological solutions available to support these activities.  

Cash flow forecasting is another popular area of interest, and several members will present their forecasting models and related technology as part of a discussion on managing input contributors, variance analysis, automation and reconciling to forecasts generated by other groups.

This will lead to a session on global liquidity planning that will address numerous issues such as deploying optimal in-house bank structures for liquidity risk management;  pooling, netting and payment factories; managing trapped cash and cash in highly regulated markets such as China; the global organizational design using treasury centers; and the necessary technology to bring everything  together.

Blog entry
By admin, August 22, 2012

What’s on the minds of our Engineering and Construction Treasurers? We have quite a range of topics for our upcoming meeting, starting with the ever popular member profile, where one of our member companies will give an overview of its company and treasury operation.

Next, given the evolving regulatory environment, we will have a review by our sponsor Bank of America on the impact of both new financial regulations and developments in Europe on bank financing. We will focus on the impact of increased capital and liquidity requirements imposed by Basel III and Dodd Frank on banks, their clients and regions operating under the new regime, and discuss the practical implications of the new capital rules and how banks are looking at capital, returns and ancillary business. We will also have an economic overview of trends and forecasts in the Americas, Western Europe and emerging markets.

Relatedly, the Eurozone debt crisis continues to pose numerous challenges, with a number of potential scenarios that could play out. Aside from managing the extensive counterparty risk, dealing with other financial and commercial/business risks is a priority, and members are looking for the optimal role treasury can play in the ongoing management of this prolonged crisis.

Members are also interested in FX exposure in light of Dodd Frank effects on hedging and accounting. We will cover approaches to FX risk management and hedging the balance sheet, cash flow, net investment, foreign earnings and M&A situations. We will also examine foreign exchange exposures and risks with cross border payments in emerging and developed markets.

The practicalities of monitoring and managing financial counterparty risk is another recurring theme. Members are watching global shifts affecting FIs, focusing on: 1) practically monitoring financial and operational risks with FIs, 2) what triggers terminating a relationship, and 3) approaches to measuring and allocating the treasury wallet in today’s world. Input from both members and sponsors on these issues should prove enlightening.

Other topics hitting the radar include bank downgrades, future capital expenditure, financing in the public bond market and strategies for achieving the over-arching goal of treasury management efficiencies.