Published: October 6, 2015
As corporates expand internationally, their treasurers face major new cash and risk management issues. Liz Salecka examines how their transaction banking partners are supporting them in new and emerging markets by developing closer ties with other banks.
As companies increasingly expand into high-growth emerging markets, new challenges are presented to their treasury operations. According to Deloitte’s ‘2015 Global Corporate Treasury Survey’ of one hundred leading corporations globally, fifty percent considered cash repatriation and foreign exchange volatility as the biggest issues treasury teams face, while fourty percent said they remained challenged by visibility into global operations, including their cash and financial exposures.
For global transaction banks, meeting their corporate clients’ needs in emerging markets can bring both major challenges as well as new opportunities.
There are an increasing number of obstacles, however, to transaction banks looking to sustain and grow their operations internationally.
Reshaping and resizing
“Ten years ago, we saw increased momentum amongst banks to become providers of global transaction banking services. However, since the financial crisis of 2009, there has been so much regulation that many banks have started to be more tactical about how they serve particular markets,” says Paul Taylor, EMEA head of GTS sales, Bank of America Merrill Lynch (BofAML).
“Banks are increasingly looking at their country networks and seeing where their strengths are and where they can best support their clients as they continue to reduce their own costs, increase profitability and boost tier one capital,” explains Paul Thwaite, head of UK sales and strategy, Royal Bank of Scotland (RBS) Transaction Services. “They can not be all things to everyone, given global macroeconomic conditions and the regulatory environment.”
In July this year, RBS announced that it had signed a referral agreement with BNP Paribas to support its Global Transaction Services (GTS) customers, and that it would no longer offer transaction services to customers who need cash management and trade finance capabilities outside the UK and the Republic of Ireland through its international country network.
“As part of our announced strategy to make RBS a simpler, stronger and more sustainable bank, RBS Transaction Services will focus on its home market capabilities in the UK and the Republic of Ireland,” said Marc Townsend, head of GTS. “In BNP Paribas, we have found a bank that has the commitment to work with our GTS customers, and we are confident that it has the people, country coverage, strong global product capability and infrastructure in transaction services to be an attractive alternative for our affected customers.”