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

Blog entry
By wchan, May 16, 2017
The Asia CFOs’ Peer Group addresses China’s new cybersecurity law, supply chain digitalization, organizational restructuring, women in leadership and more in meeting at Coca-Cola. 
 
Here are some highlights from the meeting, sponsored for the first time by Deloitte: 
 
How should CFOs react to digital disruption? Scope of responsibility in the digital age will be impacted by digital media for reporting, advanced analytics from big data, and automation from various technology enablers. One example of automation is Robotic Process Automation (RPA), where repeatable tasks with human interactions in various user interfaces can be automated using robots.
 
Robotic Process Automation (RPA) will bring improved quality. Jez Heath from Deloitte suggests implementing RPA on a small scale to start. The first step is to standardize tasks and processes. Then you can use initial savings to fund further implementation of robots, one by one, and batch by batch. Each robot can do several processes or tasks, enabling success through an operational budget, rather than CAPEX investment. Tangible benefits include reduced error in end-to-end workflows and scalability. Therefore, clearly defined tasks and processes that are stable with a high level of predictability of the exception transactions and a sizable volume of transactions will be good candidate cases for RPA. At the current cost (each robot costs between US$10,000 to US$12,000 per year to operate), the payback period could be as short as one year. 
 
Currency controls and tax issues remain key concerns in China. Foreign exchange fluctuations may cause problems in implementing global transfer pricing policy for multi-national corporations. China’s government authority, SAFE, is friendly toward “inward management adjustment” payments related to tax matters to maintain one’s global transfer pricing policy. However, SAFE will not likely approve “outward management adjustment” payments. 
 
Accelerated royalty payment (lump sum covering a few years), e.g., 10-year royalty payment, seems to be an outflow payment allowed by SAFE, as it is perceived as a trade related item. For share capital reduction, SAFE has delegated the monitoring and “approving” of such transactions to banks. With regards to interpretation of regulations related to payment outflow, Chinese banks are more forthcoming than foreign banks. China’s tax authority claims that businesses should pay more taxes in China because of (1) location savings; and (2) market premium. 
 
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.
 
 
0
Blog entry
By jneu, May 13, 2017

Would bank treasurers give up stress-testing if they could?


One of the key takeaways from the Bank Treasurers' Peer Group 13th Annual Meeting in New York this week was the enduring value of stress testing. After an opening dinner address by Morgan Stanley Managing Director and former US Congressman Harold Ford, Jr., who spoke to a political environment that will not be conducive to legislative change, a panel of government affairs experts from the banking world gave hope for regulatory softening with a changing tone from the top at the federal prudential bank regulators. This led to the hypothetical question: Would bank treasurers discontinue DFAST/CCAR stress testing if they were allowed to do so?

 
The overwhelming consensus was that treasurers would not discontinue using the elaborate stress testing processes, models and governance infrastructure they have helped build in response to regulatory requirements if those requirements went away. Stress testing resources give treasurers at banks valuable resources to better analyze risks, allocate capital, as well as liquidity, and improve earnings quality. This infrastructure provides them better quantitative information with which to guide bank strategy and work with and optimize the lines of business to support the most effective plan, given the bank's balance sheet position and a dynamic view of capital and liquidity going forward.  
 
See also, my Founder's takeaways here:
 
 
 
While bank treasurers would continue with stress-testing, they would like to see some tweaking of the regulatory requirements and easing of the compliance burden, including:
 
1) More transparency on the test model. Treasurers would like more transparency from the Fed on the model they are being tested against. No model is perfect and they would be better able to understand the comparative variances in the outcomes from their own models and achieve more certainty about the capital they have in excess if they knew more about it.
 
2) Documentation requirements are too severe. There is overwhelming agreement that too much time is spent on documentation of every model and related process guiding decisions, along with every judgment made. It is time to stop wasting everyone's time and effort on work that creates no value and that write-ups that no one would otherwise read.  
 
3) Limit the severely adverse scenarios. The severely adverse scenarios that the Fed comes up with each year to test banks tend to deviate from realities that banks would face in a crisis, which is what they should focus on to ensure adequate capital and liquidity in the event of one. The goal should be to provide banks with useful information that they can act upon, not useless information that shows they passed an arbitrary test.
 
4) Standardize the requirements. If they could have a fourth wish, treasurers would like to see greater consistency in requirements across federal and state regulators, so they don't have to have separate processes, reporting and documentation to satisfy the Fed and the OCC, for example, and then deal with further idiosyncracies from state regulators.    
 
Finally, a note about the role of bank treasurers. Like their peers on the non-bank side, their role is becoming more strategic and broad. Bank treasurers, however, have more strategic juice thanks to the above-mentioned stress testing apparatus and their more direct influence on pricing and policy for the financial products and services that banks sell.
 
Thanks to all the treasurers who participated and to Morgan Stanley for their sponsorship of the 13th Annual BTPG meeting. For more information about the Bank Treasurers' Peer Group (BTPG), click here
1
Blog entry
By bshegog, May 10, 2017
The Assistant Treasurers’ Leadership Group will meet at Chatham Financial to discuss tax reform’s potential impact on the liquidity portfolio. 
 
Is tax reform finally coming? That’s the question that’s been on the minds of ATLG members since the new US administration took over earlier this year. The group will get a full overview of the tax reform proposal and discuss the likelihood of cash repatriation as well as BAT and interest deductibility in its meeting May 24-25 in Kennett Square, Pennsylvania. 
 
Members will also consider capital structure and internal lending as they relate to tax reform. How will global trading, capital allocation and flow-of-funds models and processes change in the event of a tax break? And what opportunities are there to review and restructure the balance sheet in the case of a sudden shift in cash/assets from foreign to US books?
 
Finally, the group will review a recent FASB exposure draft on hedge accounting. In September 2016, the FASB released the draft with the aim of making “targeted improvements to the hedge accounting model based on the feedback received from preparers, auditors, users and other stakeholders.” The Board will consider opportunities to align with IFRS 9 Financial Instruments, with the goal of making hedge accounting easier to achieve and account for and reducing the risk of restatement. Experts in the field will provide a full analysis of the draft and recent developments from the FASB. 
 
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.
 
0
Blog entry
By thoward, May 09, 2017
In the May issue of iTreasurer we take a peek at tax policy and the ongoing challenges of doing business in Latin America. In between we discuss the dangers that the repo market poses, M&A, a new swap product and more on LatAm counterparty risk.
 
But first, tax reform. Whether it will ever happen and in what form obviously remains to be seen. So while all wait with breaths abated, it seems the markets are content to calmly tread water, move sideways and otherwise mosey nowhere -- with maybe an upward bias in stocks and a downward bias in interest rates. This quasi-ennui is reflected on page 1 in, “Uncertainties of Tax Reform and Rates Keeps Treasurers Short.” Here we discuss what corporates are up to with their cash as they wait for whatever transpires and (they hope) rates to rise. Generally speaking, whatever they're doing, they are keeping durations short and staying flexible in case rates eventually do rise as the Federal Reserve wants them to. But unfortunately the market doesn’t believe them. “You’re seeing a Fed that has begun to raise rates and has told us they intend to raise rates further this year,” says Jerry Klein. “But the market doesn’t appear to believe it when you see the 1-year Treasury at 1% and the 2-year at around 1.25%.” Thus, investment managers are taking a wait-and-see approach to see what happens with rates and just as importantly, tax policy.
 
In “Anticipated Exposures” on pages 4 and 5, we discuss how communication is critical to M&A success, assessing counterparty risk in Latin America and also a new swap curve product from Eris Exchange.
 
On page 6 in “Will Repo’s Smaller Profile Create Problems?” we discuss how the lack of bank intermediation has shrunk the size of the repurchase agreement or repo market. “[B]anks have stepped away from the market or largely curtailed their role in the markets mainly due to new rules,” according to a report from the Bank for International Settlements. “These rules include stricter standards like the leverage ratio and the G-SIB capital surcharge” that for many banks requires holding capital in proportion to the size of their balance sheets. Since repo is more a service than a money-maker, banks are reluctant to use up balance sheet space with it.
 
This month’s NeuGroup Peer Group summary, on page 7, is from the LatAm Treasury Peer Group, which met earlier in 2017 in Miami. At the meeting members discussed what impact US policy under the Trump administration will have on the region. The verdict: “Fortunately, it appears that the impact will not substantially affect a return to economic growth for at least two of the three major economies.” This led to a more substantive discussion on bank offerings in the region.
 
On page 11, contributor Geri Westphal interviews Deutsche Bank’s Roger Heine who offers thoughts on the possibility of tax reform and the impact it could have on tax deductibility. Many have speculated that elimination of this deductibility of corporate interest could have a negative effect on companies with a lot of debt. But Mr. Heine says getting rid of tax deductibility on debt “may only have a limited long-term impact on how most companies use debt in their capital structures, and by implication limited impact on the structure of capital markets and financial institutions.”
 
Finally on page 15, contributor John Hintze discusses bond issuance and how companies are keeping their issuance on the short side and finding floating-rate notes attractive to issue. Like their counterparts in cash management, treasurers are keeping things short as they await more direction from Washington.
 
Enjoy.
 
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.
0
Blog entry
By thoward, May 04, 2017
Internal audit’s role is expanding both globally and strategically.
 
Members of the NeuGroup’s Internal Auditors’ Peer Group will get together May 24-25, 2017, at Hewlett-Packard Enterprises in Palo Alto to discuss a range of issues. Along with the customary discussions on integrated audits, third-party audits and other meat and potato issues, the group will also take on international tax planning as well as explore economic risks with the its first ever session on the economy.
 
An economist from frequent NeuGroup partner PIMCO will lead a session on the economy and the risks that could have an impact on a company’s product mix. IA’s role as a trusted advisor to management and the board of directors is imperative in today’s world. Auditors must have more diversified skills to help management and give context when corporate strategies are being developed. The PIMCO presentation will examine what risks lay in wait in the last half of 2017 and in 2018.
 
Other sessions will include a look at auditing international tax strategies – including a look at the OECD’s BEPS initiative, effective remediation efforts, auditing business partners like suppliers, and other third parties. Also on the docket will be a discussion of integrated audits; that is, working with compliance, ERM and other like auditing functions.
 
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.
 
0
Blog entry
By afriberg, May 03, 2017
The European Treasury Peer Group meets in London at the end of May to discuss current trends and challenges for regional MNC treasurers. 
 
Key sessions will include:
 
Impact of Global Trends, Markets and Regulations: Led by the economist team at Standard Chartered, this session will examine trends in global markets and regulations and how these will impact business, trade and treasury. 
 
Leveraging Technology to Transform Treasury: Treasurers are confronted by a tidal wave of new technology and fintech, including treasury in the cloud, big data, blockchain, mobile money, payment digitization and behavioral risk analytics. Is virtual treasury possible? Should you work directly with fintechs or via your bank? What can be practically leveraged, and what is just hype? This session will be an interactive debate and attempt to define a practical path forward.
 
Bank Connectivity via Cloud Solution – Member Case: One member company is in the process of implementing a new complete bank connectivity and treasury management system. Following up on the treasury technology session in the morning, the group will walk through some of the background and considerations for system and configuration choices, implementation scope and challenges, and what the “end-state” will look like. 
 
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.
 
0
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.
 
0
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.
 
0
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.
 
0
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.
 
0