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On the second day of EuroFinance 2011, the plenary panel discussion revolved around the questions corporates should be asking their banks on best practice. The playing field was evenly matched, with three corporates and three banks.
The second session of day two at the EuroFinance conference in Rome delved into the corporate/bank relationship, looking at what can be done to improve performance and services. The panel was made up of three corporate and three banking representatives:
Johal said that he wanted a bank that could show an understanding of the company’s business, the treasury model and the organisation as a whole. He wanted a bank that could listen, with the same level of experience. He made the point that banks really needed to get the onboarding process right and deliver what they promise on time.
Kirkland agreed that banks had to listen and added that he wanted them to present solutions that solve the pain points he faces. Mehta said that listening and understanding could always be done better. “Banks must understand the domain that theses solutions are being used - in the way that Steven Jobs understood the consumer.”
Berndt came back on the two main points of predictability and relationships. She said: “In many ways this is like a marriage - yet we are still talking about ‘the banks’ and ‘the corporates’. Coming together will drive true reform. Banks have to realise that what is right for the client doesn’t mean that it is right for the P&L [profit and loss] of a specific product. Sometimes it is better to take a hit on a specific product’s revenue, because you know that you will pick the loss up somewhere else. It is like taking a hit for the greater good.”
After the initial discussion, the audience was asked a number of questions, the first being how do you rate your bank on a scale of one to nine, with nine being top notch? Thirty-one percent and 29% rated banks seven and six, respectively. Only 5% gave banks a nine rating.
The participants were then asked what is the banks’ biggest shortcoming? Twenty-eight percent cited documentation, while 16% each chose fee transparency and failure to understand the business. For Millar, a bank’s lack of understanding its own business was a source of much frustration. She felt that senior management’s intent often could not be executed on the ground. Johal also agreed, saying that ‘global’ doesn’t always work. “We have faced issues in that delivery doesn’t meet expectation.”
Schmand argued that in order to truly be a global network bank, and attain the “McDonald’s-affect” where the experience is uniform no matter what geography the bank operates in, a bank would need to be operating from one single platform.
When asked what corporates can do to improve the banking relationship, 55% of the audience said greater openness and transparency. Berndt again returned to the theme of relationship. “Openness is about finding out what your client needs. For example, if a corporate client is going through a big M&A deal then that probably isn’t a good time to talk to them about payments.”
- Carole Berndt, head of EMEA, global treasury solutions, Bank of America Merrill Lynch (BofA Merrill).
- Darsh Johal, head of global cash management, Shell Treasury Centre.
- Dr Mark Kirkland, vice president treasury, Bombardier Transportation.
- Rajesh Mehta, regional head of treasury and trade solutions Europe, Middle East and Africa (EMEA), Citi.
- Debbie Millar, group executive - treasury, funding and investor relations, MTN Group.
- Daniel Schmand, managing director, head of trade finance and cash management corporates EMEA, Deutsche Bank.
Johal said that he wanted a bank that could show an understanding of the company’s business, the treasury model and the organisation as a whole. He wanted a bank that could listen, with the same level of experience. He made the point that banks really needed to get the onboarding process right and deliver what they promise on time.
Kirkland agreed that banks had to listen and added that he wanted them to present solutions that solve the pain points he faces. Mehta said that listening and understanding could always be done better. “Banks must understand the domain that theses solutions are being used - in the way that Steven Jobs understood the consumer.”
Berndt came back on the two main points of predictability and relationships. She said: “In many ways this is like a marriage - yet we are still talking about ‘the banks’ and ‘the corporates’. Coming together will drive true reform. Banks have to realise that what is right for the client doesn’t mean that it is right for the P&L [profit and loss] of a specific product. Sometimes it is better to take a hit on a specific product’s revenue, because you know that you will pick the loss up somewhere else. It is like taking a hit for the greater good.”
After the initial discussion, the audience was asked a number of questions, the first being how do you rate your bank on a scale of one to nine, with nine being top notch? Thirty-one percent and 29% rated banks seven and six, respectively. Only 5% gave banks a nine rating.
The participants were then asked what is the banks’ biggest shortcoming? Twenty-eight percent cited documentation, while 16% each chose fee transparency and failure to understand the business. For Millar, a bank’s lack of understanding its own business was a source of much frustration. She felt that senior management’s intent often could not be executed on the ground. Johal also agreed, saying that ‘global’ doesn’t always work. “We have faced issues in that delivery doesn’t meet expectation.”
Schmand argued that in order to truly be a global network bank, and attain the “McDonald’s-affect” where the experience is uniform no matter what geography the bank operates in, a bank would need to be operating from one single platform.
When asked what corporates can do to improve the banking relationship, 55% of the audience said greater openness and transparency. Berndt again returned to the theme of relationship. “Openness is about finding out what your client needs. For example, if a corporate client is going through a big M&A deal then that probably isn’t a good time to talk to them about payments.”
Treasury Verdict
The third session focused on giving the delegates an opportunity to make their views known on some of the most interesting and important treasury issues of the day. Here are a few of the results:Will the US dollar be replaced as the reserve currency in the next 10 years?
- Stay with US dollar - 48%.
- Euro - 11%.
- New basket of currencies - 26%.
- Renminbi (RMB) - 12%.
- Swiss franc - 3%.
What is the biggest concern with regards to China in the next 10 years?
- No concerns - 15%.
- Chinese economy will collapse - 13%.
- Heading for long-term decline - 11%.
- Domination of world economy - 36%.
- Implosion due to social turmoil - 25%.
Where do you see growth?
- US -10%.
- Latin America - 45%.
- Middle East - 22%.
- Sub-Saharan Africa - 21%.
- Southeast Asia - 47%.
- Western Europe - 16%.
- Central and eastern Europe - 36%.
How much will the share of revenue from emerging markets grow in the next 10 years?
- No change - 3%.
- Decline - 1%.
- Grow by 50% - 27%.
- Grow by 100% - 16%
- More than double - 19%.
- More than triple - 12%.
- No idea - 10%.
- Not relevant - 12%.
Has company investment policy been affected by the US downgrade?
- Yes - 11%.
- No - 89%.
Where would you put your spare cash in a stable market?
- No spare cash - 7%.
- Pay down debt - 26%.
- Diversified investments - 26%.
- Expansion/M&A - 23%.
- Build cash buffers - 5%.
- Distribute to shareholders - 13%.
What are you doing to protect your supply chain?
- Offer better payment terms - 16%.
- Direct financial support to suppliers - 14%.
- Work with bank to provide finance - 43%.
- None of the above - 23%.
- Squeezing the supply chain - 30%.
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