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

Blog entry
By bshegog, May 02, 2017
With improving economic conditions and the new administration’s pro-growth agenda, 2017 is shaping up to be an interesting year for short-term debt markets. 
 
Members of the Treasury Investment Managers’ Peer Group 2 will meet at Autodesk to discuss everything from tax reform and credit management to operations and investment solutions. To kick off the meeting, Lance Pan and Marc St. Andre from Capital Advisors Group will predict which economic indicators and market developments will have the greatest impact on corporate liquidity portfolios and help members determine appropriate portfolio strategies to face the market uncertainty ahead. 
 
Speaking of uncertainty, the TIMPG2 awaits tax reform and repatriation with bated breath. With more than $2.5tn held by US corporations overseas, the anticipation is that the release of cash would have a significant and positive impact on US markets. However, the trend has been for US corporations to amass debt as an offset to the growing levels of cash offshore. How will the release of these funds impact the financial markets, and what other consequences lie ahead?
 
With many also reconsidering their move out of prime money market funds, the group is left with one final question: “What do we do with all this cash?” To close out the meeting, two members will comment on their liquidity structures and how money market fund reform has affected their liquidity portfolios. 
 
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 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 bshegog, May 01, 2017
The Corporate ERM Group looks to identify emerging risks in annual meeting in Purchase, New York. 
 
To kick off the meeting, hosted by Mastercard, members will discuss how they’re thinking about and identify emerging risks at their respective companies. These risks may be “bubbling up” or “flowing down.” Where do members see risks manifesting? And is there data to corroborate them? The hope is that members will leave with a better idea of how to mitigate and respond.
 
The group will also discuss the institutionalization of risk management. Today, companies are training non-risk managers in risk management and using new communication tools. What skills should next-generation ERM practitioners possess? And what devices should they employ?
 
Following a presentation by Mastercard on the company’s ERM program, the group will consider the challenge of using “alternate” sources of risk data and best practices for risk reporting. Day 2, focused on cybersecurity, includes a session on data privacy regulations. 
 
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 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 bshegog, April 27, 2017
Tax reform, short term liquidity and rising interest rates were featured topics at the recent TIMPG meeting hosted and sponsored by Deutche Asset Management. The most talked about topic was the Trump administration’s impact on policy. 
 
Today there is a big disparity between expectations and reality in Washington. Frank Kelly, Managing Director and Head of Government Affairs at Deutche Bank, kicked off the meeting by telling the group what to expect from the Trump Administration for the rest of 2017 and beyond. Members enjoyed the sneak peek into what’s occurring in Washington. Mr. Kelly attaches a slim probability to repealing and replacing Obamacare, and although he believes some tax reform will be passed, he expects the bill to be a much less comprehensive reform. On a positive note, Mr. Kelly does see some stabilization in the Trump Administration.
 
Members are looking to move beyond the traditional money market space. Since the beginning of the year, investors have begun moving back into prime money market funds, and that trend is expected to continue. Liquidity has been good, and funds have been kept deliberately short. With US money market fund reform off without a hitch, members are now focused on European money market fund reform. 
 
Still waiting for news on repatriation. All members reported that they’ve discussed repatriation with management and started to prepare, but Mr. Kelly said that he has not seen anything in Washington on how repatriation would work. He explained that everyone seems to agree repatriation would be a good thing, however, with limited details and discussions, everyone could be left scrambling. 
 
Cyclical improvement is present in the economy, but structural challenges persist. When members were polled about their thoughts on the US and global economies, most said they had a positive outlook on the global economy and a very positive outlook on the US economy. Josh Feinman, Chief Global Economist at Deutsche Asset Management, agreed mostly with the group’s view. He does see cyclical improvement in that the global economy is on better footing and some downside risks have diminished That being said, structural challenges such as sluggish potential growth and a backlash against globalization could stall an economic recovery. 
 
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 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 gwestphal, April 25, 2017
Members of NeuGroup’s Global Cash and Banking Group will look for guidance in dealing with potential business-friendly tax reform, regulation rollbacks and changes to trade, economic and monetary policies in their upcoming meeting sponsored by Deutsche Bank. 
 
Changes in the US and Global political and economic environment are plentiful this year, and with the global impacts of Brexit and the trajectory of OECD BEPS, treasury professionals have much to think about and plan for. How might potential deregulation of banking play out, and how should treasurers prepare? What will an optimal global capital and liquidity footprint look like post-tax reform?  There are a lot of moving parts, and treasury teams must position themselves now to be ready for a variety of outcomes. 
 
The GCBG will gather at Electronic Arts in Redwood City, California, to discuss proposed policy changes, as well as best practices in counterparty risk management and innovations in bank rationalization. There will also be a showcase of HP’s signatory verification process following the separation of Hewlett-Packard Company into HP Inc. and Hewlett Packard Enterprise Company. 
 
Finally, as TMS implementation continues to be top-of-mind, members will share details of their system updates and initiatives in a roundtable session. 
 
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 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
Citi, Conference
By jneu, April 21, 2017

It was a pleasure to encourage knowledge exchange on global and Latin American treasury trends with Citi clients in Miami.

Citi’s Treasury Advisory and Market Management Global Head Ron Chakravarti invited me to do a workshop with him on Managing Regulatory and Tax Change as Part of the Treasury Playbook at the bank’s 14th Annual Latin America and Finance Conference this week in Miami. We both shared insights from client engagements on what’s driving treasury priorities and tied then back to how treasury is managing regulatory and tax change to a very significant extent. As NeuGroup shares a similar MNC client base with Citi, our priorities map was in sync. And we agreed on some of the key drivers on the regulatory and tax side. More importantly, we received validation from Citi clients in our workshop, which we conducted with four different sets of clients over the course of the conference.

Here are some key points that clients validated or shared:

  • Global bank regs are challenging the greater presence desire of MNCs in the region. There’s no doubt that MNCs want a greater global bank presence in Latin America. This takeaway from NeuGroup's LatAm Treasury Peer Group meeting a few weeks ago was validated again here. [A summary of that meeting is available here.] Citi has an advantage being in more markets than any other global bank and it is likely to have a window of time where this advantage is maintained before technology and bank streamlining of KYC and other compliance rules make opening and closing bank accounts less of a nightmare. Until they do, treasurers will think twice about switching banks or giving up on bank rationalization to set up additional accounts with local banks, even when they are in an effective partnership with one of their global bank partners.
  • Global tax change as a driver. As a CFO for the region noted, OECD BEPS is going to be a driver for the next several years and while US tax reform is top of mind for US MNCS, treasurers can't ignore tax reforms elsewhere, including in Latin America. Areas of concern include arm’s length transfer pricing on interest and intercompany financial transactions from loans to royalties, documentation of intercompany transactions to more closely mimic external financial transactions and data gathering. If your company has not undertaken a thorough review of intercompany transaction procedures and documentation recently you should do so. Also, as with US tax reform, there is a concern about broadening efforts to mitigate interest expense deductibility and introduce or step up value added tax collection.
  • VAT tax collection creativity. Latin American treasurers are ever more creative in looking for ways to work around challenging rules. One treasurer for a company with a substantial retail presence described a practice in a growing number of Central American countries to automatically withhold VAT taxes on credit card payments. As they tend to cast a wide net on potential transactions subject to VAT, this is tying up significant cash flow. He is looking for a solution and thinks some local governments might be open to securitization as a way to continue to use withholding to accelerate tax receipts but also give companies a date certain on when they will receive back over withheld amounts, which would enable securitization backed by government receivable assets.
  • Digitalization positives. On the positive side of tax revenue collection, some Citi clients noted how the effort to digitalize transactions, both with payments and electronic presentment of invoices to curb tax evasion across the region, was actually making it easier to standardize payments and collections. This will increasingly aid centralizing them from a shared service center or payment/collection factory structure as legacy tax and regulations fall away. It will also empower working capital solutions leveraging e-presentment of invoices.

These and other takeaways from the Citi conference give me added confidence in treasurers' ability to create value in Latin America that will only increase as the region moves further along its current path to growth. My thanks to Ron and Citi for allowing me to exchange knowledge with their clients in Miami.  

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Blog entry
By jneu, April 19, 2017
Bank Treasurers look to assess changes to bank regulation with President Trump and a Republican Congressional majority, plus new people at prudential regulators, while keeping an eye on the rate environment. 
 
Changes in Washington that were not given much probability at last year’s Annual Meeting of the Bank Treasurers’ Peer Group will dominate this year’s discussions. What might Trump’s Washington do to reform US bank regulation? To help shed light on this, we will have a panel made up of government affairs heads from our sponsor bank, Morgan Stanley, member banks, plus experts from The Clearing House and Financial Services Roundtable. Among the items to be discussed are the Choice Act, erasing the arbitrary $50B total asset line for more stringent stress-testing and supervisory review created by Dodd-Frank, the new Fed stance post-Tarullo, the changes likely coming to housing finance and efforts to introduce regulation for fintech companies that are competing and increasingly collaborating with banks.
 
Bank stocks, including those of the group’s mostly US regional bank members, signaled the initial optimism for a more profit-friendly banking business environment when Trump was elected. This was due to better prospects for regulatory relief as well as anticipated Fed moves on rate hikes. Bank stocks since Trump’s inauguration have shown more uncertainty. How will a rising rate environment play out over the next 12 months and how NIM-friendly will it be? These questions are on the minds of investors and will be a big topic of discussion for bank treasurers, too. Plus, the Fed has hinted it may start shrinking its $4.5T balance sheet sooner than anticipated, which will have bank treasurers looking at how this will impact markets for the assets the Fed will allow to run-off or sell, along with the impacts on the yield curve. This will make the perennial discussions about interest rate policy adjustments and deposit policies even more interesting. And, what are fixed income investors in bank debt thinking given these changes?
 
Finally, while the likelihood of distinctions between banks above and below the $50B total assets line are more likely to be dissipating from a supervisory and regulatory standpoint, until they do, this year’s Annual Meeting will provide more focused sessions for banks on either side of the line to discuss key issues. We will also take the time to help banks with non-US parents navigate the intermediate holding company process.  
 
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 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 bshegog, April 17, 2017
The Assistant Treasurers’ Group of Thirty meets next month to examine and discuss the impact of the new administration on the global economy and the corporate balance sheet. 
 
With the Trump administration focused on tax reform, several meeting sessions will center on the potential implications – some of which are more obvious than others. Meeting sponsor Credit Suisse will talk about likely shifts in trade, economic and monetary policies, and members will review the preparatory changes they’ve have made in recent months. 
 
When it comes to the liability side of the balance sheet, members will go over their current working capital models. Should they issue floating or fixed debt, and how should they prepare for repatriation? The pre-meeting survey revealed that more than two thirds of the AT30 has done some initial preparation. The group will discuss how it plans to advise senior management to get ready for these changes. 
 
Finally, the group will address the question, “What is the best, most efficient Treasury structure?” Several members will share insight into their own organizational structures and the tradeoffs considered in their development. The group will also look at peer benchmarking data collected from the pre-meeting survey that looks at total FTEs and the tradeoffs made to org charts when resources are limited. 
 
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 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 10, 2017
This month iTreasurer tackles FX management as well as new proposals for hedge accounting from the Financial Accounting Standards Board (FASB). In between we discuss how activists took it easy on companies in 2016, why the US dollar may be heading higher and how more and more companies are bringing supply chains into their cash management universes. Also, our peer group meeting summary this month, the NeuGroup’s Treasurers’ Group of Thirty (T30), discusses cash, taxes and regs.
 
First up on page 1 in “Politics, Uncertainty and FX,” contributing editor and peer group leader Anne Friberg discusses key takeaways from a panel she moderated at EuroFinance in San Francisco in early March. As the story headline suggests, there has been no shortage of politics and uncertainty in the last year and it all has a big impact on currencies. Beginning with Brexit and its fallout and running through to the election of Donald Trump and its fallout, currencies are edgy. For instance, Trump’s election caused the peso to drop and Brexit has beaten up the British pound. Meanwhile, Europe is feeling the wave of nationalism, putting the euro in jeopardy as candidates campaign on possibly following the UK out of the EU. The Dutch didn’t go for nationalism in their recent election but there remains a possibility that France might; and who knows what will happen in Germany. All of which was good fodder for the panel that included Priti Kartik, global treasurer at Logitech; Wolfgang Koester, CEO of FiREapps; and Helen Kane, president of HedgeTrackers.
 
In the peer group summary, T30 members discussed the aftermath of IRS Section 385 threats, which turned out not to be as onerous as thought (though companies are not out of the woods); President Donald Trump’s proposals to lower the corporate tax rate to 15% and a proposed 10% repatriation tax. Also how companies are looking to reduce the costs of hedging.
 
In our Anticipated Exposures section, we discuss how activism against large non-financial US corporates, while increasing in 2016, was slower than the double-digit growth in prior years going back to 2012. Also, how anticipation of President Trump’s promised tax-related policies have propelled US stocks to record highs and are expected to prompt the Federal Reserve to continue rate hikes this year. This would be a boon to corporate treasuries investing cash. However, the Fed may tap the brakes if stocks get too lofty and the buck strengthens too much.
 
On page 11, contributing editor Geri Westphal interviews Mark O’Toole, Vice President Treasury and Commodity Solutions at financial risk technology company OpenLink about the top trends for best-in-class currency and commodity hedging. The crux of the interview centers around how technology is breaking down the barriers or siloed approach that separated treasury from procurement. The fact is, “combining both currency and commodity exposures and the related hedges within the treasury department, corporate treasurers have been able to more effectively manage the company’s risks.” This is far from the historical norm of having treasury manage currency exposures while procurement took responsibility for commodity exposures. But technology has been able to bring the two disparate parts together.
 
Finally, on page 15, contributor John Hintze discusses the impact of the FASB’s latest proposals on hedge accounting. The proposals should bring some relief to corporate hedgers as they seek to more simply hedge their various exposures. 
 
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
takeaways
By jneu, April 08, 2017
Here are my "Founder's Takeaways" from our 2017 H1 Latin American Treasury Peer Group meeting. It was a real pleasure to step in and lead the Latam group, which is always a fun one. Many thanks to our host and sponsor Bank of America Merrill Lynch. 
 
 

Takeaways:

 
1) Trump turmoil is not as big a deal for the region. Argentina and Brazil are coming out of recession, though BAML is saying sub-2 percent GDP growth, and the typical pattern of a US Fed rate hike cycle leading to recession in the region may not hold if the hikes are gradual enough. Hyperinflation is not in the cards either. Mexico is a bit out of synch sandwiched between the US election shock and its own presidential election next year, where the leftist party is polling well. Higher US rates may still curb some investors from searching for yield in Latin America, but other underlying sources of trade and economic growth, including the influence of China on the regions' economies are more positive.
 
2) Transformation pieces of proposed US tax reform don't look as likely. An expert from PwC presenting on tax reform proposals and their probability suggested that the border adjustment tax and curbs on interest expense deductibility are less likely to come to pass. And, even if, say, the border adjustment tax came into being, the impact on the region starting with Mexico might not be as severe as feared. Much depends on the labor cost component of manufacturing, the exchange rate adjustment and how the cost of moving it to the US gets weighed against the potential tax benefits of doing so.
 
3) A change in the Latam Treasury Peer Group's secondary mandate. This group's secondary mandate has always been to encourage the members' global banking partners to build and maintain their presence in this region to link it to their respective global banking and treasury operations platforms. Recent pullbacks by global banks like HSBC from Brazil have left them frustrated. Citi is really the only player of significance when it comes to maintaining its own geographic coverage in the region. However, Bank of America Merrill lynch made a compelling argument that strategic alliances with local banks supported by service level agreements, innovation and technology integration could deliver for MNC clients in the region. Most are currently forced to work with local banks to some extent, in any case. Global bank alliances with local banks, of course, is nothing new. However, the realities of global banking and the new regulatory constraints on building and maintaining full geographical coverage in Latin America or other regions makes investment in strategic alliances more responsible and advances in technology make it more viable. The question is if and when banks can get it right. Accordingly, the Latam group's secondary mandate now includes the exploration of this option for regional banking services.
 
Next up for me is the NeuGroup's Tech20 meeting May 4th in Silicon Valley California, also sponsored by Bank of America Merrill Lynch.
 
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Blog entry
By aorwick, April 07, 2017
Are you holding on to your cash to run your operations? Safeguarding your liquidity? What if you could make that cash work harder and produce more value?
 
Join NeuGroup’s live panel discussion to challenge your concepts of working capital and learn how to effectively manage your cash. 
 
Challenging Beliefs Around Working Capital 
April 26, 9 PDT/12 EDT
 
More and more forward-looking corporates are embracing financial technology to find working capital solutions within their supply chain. Putting cash to use for your bottom line, not against it, presents a completely new approach that enables leaders to grow their business.
 
During this interactive webinar, you’ll discover how to identify and manage the unintended consequences of holding high levels of cash and increase the efficiency of your cash management strategies.
 
Joining the panel will be:
 
• Shaila Bettadapur, Vice President and Treasurer from Mohawk Industries and NeuGroup member
• Jason Bristow, CFO from Interactions LLC and Tech20 alumnus.
• Kevin Ehinger, Vice President Market Operations from C2FO.
 
The liquidity paradox is truly a global problem. That is some companies have too much liquidity while also having too little. Banks don’t want cash deposits and there are too few places to invest. And although economic conditions and regulations vary from one region to the next, the overall trends and the fundamental liquidity paradox conditions remain in place in every region and industry sector. 
 
Register now to participate in this live panel discussion with industry experts as they explore ways to put your cash to work to produce the economic value it should.
 
 
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