Hybrid Cash Pooling solution has been specifically built to meet the need of challenging markets while boosting the business and economic values of the companies. It is a system that uses two or more distinct cash balancing engines to maintain credit and debit positions of various accounts in the book of the service provider bank.
Workshop - Best of Both Worlds_ Combine KG and Vector search for enhanced R...
Hybrid Approach to Unlocking Liquidity in Challenging Markets
1. Hybrid Approach t o
Unlock ing Liquidit y in Challenging Mark et s
Must afa K ILIÇ
R egional T reasury & Goup Insurance Manager
Group T reasury
Indesit Com pany Int ernat ional Business S.A. | Sw it zerland
EuroFinance Int ernat ional Cash & T reasury Managem ent 19 t h Annual Conference
6-8 Oct ober 2010, Geneva Palex po, Geneva, Sw it zerland
2. Agenda
Challenges facing t reasuries
R eshaping t he t reasury
Liquidit y solut ions cont inuum
T rapped in cash
Becom ing hybrid
T he hybrid cash pooling solut ion
Q&A
Long w ords in short
3. T he new look of cash and t reasury m anagement
is being chast ened by risk and shaped by
globalizat ion.
4. In com plex environm ent s, cross-border
m ovem ent s and abilit y t o hold offshore and
FCY account s are highly regulat ed.
5. Local regulat ions oft en rest rict int er -com pany
m ovem ent s or require cent ral bank approval
and report ing.
6. T reasurers are cont inuously seek ing a bet t er
plat form w here t o st rat egically m anage t he
ent ire cash m anagem ent process t o increase t he
int rinsic value of t he business.
7. It is not feasible t o have one approach for all
count ries w hen it com es t o cash and t reasury
m anagem ent due t o different jurisdict ions in
each count ry.
8. R eshaping t he t reasury
Harm onizat ion Liberalizat ion
Cont rol Focus Cent ralizat ion
Technology Out sourcing
9. Liquidit y solut ions cont inuum
Dom est ic Cash Concent rat ion
Dom est ic Cross Border
Not ional Not ional
Pooling Pooling
Cross Border Cash Concent rat ion
10. Som e ent it ies m ay not be perm it t ed t o
part icipat e int o cash concent rat ion or not ional
cash pooling agreem ent .
11. Cash concent rat ion and not ional cash pooling
give rise t o com plex legal, regulat ory,
account ing and t ax considerat ions.
14. Hybrid approach t o cash pooling
Dom est ic Cash Pooling
Cash Concent rat ion Not ional Cash Pooling
Cross-Border Cash Pooling
15. “ Hybrid cash pooling” is a syst em t hat uses t w o
or m ore dist inct cash balancing engines t o
m aint ain credit and debit posit ions of various
account s in t he book of t he service provider
bank .
19. Becom ing hybrid
ZBA NCP HCP Overdraft
Part icipant Header Header Part icipant
Account s Account Account Account s
€50 CR €10 CR
€10 DR €10 DR
€20 DR €40 DR
€20 CR €40 DR
20. Becom ing hybrid
ZBA NCP HCP Overdraft
Part icipant Header Header Part icipant
Account s Account Account Account s
€40 CR €10 CR
€10 DR €10 DR
€10 DR €40 DR
€20 CR €40 DR
21. Hybrid cash pooling
ZBA NCP HCP Overdraft
Part icipant Header Header Part icipant
Account s Account Account Account s
€40 CR €10 CR
€10 DR €10 DR
€10 DR €40 DR
€20 CR €40 DR
22. Hybrid cash pooling
ZBA NCP HCP Overdraft
€20 CR
Part icipant Header Header Part icipant
Account s Account Account Account s
€40 CR €10 DR
€10 DR €10 DR
€10 DR €40 DR
€20 CR €60 DR
23. Hybrid cash pooling
ZBA NCP HCP Overdraft
€70 CR
Part icipant Header Header Part icipant
Account s Account Account Account s
€40 CR €10 DR
€10 DR €60 DR
€10 DR €40 DR
€20 CR €110 DR
24. Hybrid cash pooling
ZBA NCP HCP Overdraft
€70 CR
Part icipant Header Header Part icipant
Account s Account Account Account s
€40 CR €10 DR
€60 DR €10 DR
€10 DR €40 DR
€30 DR €60 DR
25. Hybrid cash pooling
ZBA NCP HCP Overdraft
€70 CR
Part icipant Header Header Part icipant
Account s Account Account Account s
€10 DR €10 DR
€10 DR €10 DR
€10 DR €40 DR
€30 DR €60 DR
27. What does it t ak e t o st ep up?
It t ak es t h ree t o fi v e m on t h s t o bu i l d a h ybri d en gi n e
6-8 w eek s 3-4 w eek s 5-7 w eek s 1-2 w eek s
St ruct ure P rovider P lat form Service
•P lan •Part icipant s •Docum ent at ion •Test s
•Design •Evaluat ions •Im plem ent at ion •Trainings
•Requirem ent s •Select ions •Ex ecut ion •Deploym ent
28. Offers a broad spect rum of benefit s
Creat es efficient w ay t o consolidat e liquidit y w it h
bet t er geographic coverage.
Elim inat es local borrow ing needs w hile reducing
corporat e guarant ees for local credit lines.
Brings econom ies of scale in financing condit ions
w it h increm ent al incom e st at em ent im provem ent s.
Enhances cont rol of cash balance and increases it s
visibilit y.
T reasury can overdraw in currency of choice.
Maint ain local bank account s t o serve local needs.
29. Offers a broad spect rum of benefit s
Elim inat es int er-com pany loans w hile creat ing new
funding vehicle.
R educes or elim inat es FX and sw ap t ransact ions t o
offset t he debit posit ions of t he account s.
R educes num ber of operat ional t ransact ions and it s
cost .
No physical m ovem ent s of funds across ent it ies or
account s at header account level.
No change in ow nership of cash.
No addit ional hardw are/soft w are on user side.
30. T hings needed t o be considered
Hybrid cash pooling prohibit ed or m ay be subject
t o recharact erized in som e count ries.
Som e ent it ies m ay not be allow ed t o part icipat e
int o hybrid cash pooling agreem ent .
Occasionally requires physical m ovem ent of funds
across account s.
May require t he parent com pany guarant ee.
Invest m ent st rat egy for ex cess liquidit y.
T ax and legal opinion.
31.
32. Long w ords in short
Cash in ex cess of w ork ing capit al at local level
no longer rem ain “ t rapped” or subject t o local
invest m ent vehicles.
Short t erm funding in t he currency of choice
w it hout t he t radit ional reliance of int er-
com pany loan st ruct ures.
Hybrid solut ions have been specifically built
t o m eet t he needs of challenging m ark et s
w hile boost ing t heir business and econom ic
values for robust fut ure.