International Treasury Management

1
International Treasury Management

• Presentation to
• Bankers Association for Finance and Trade
• Darin P. Narayana
• November 13, 2003

2
Introduction

• International treasury management - increasingly
  centralized or centrally coordinated
• Most U.S. corporations are in need of global
  treasury platforms
• For providers
• Highly profitable business - FX, inv balances,
  etc.
• Issues relating to branch network or strategic
  partnerships
• Lack of sophistication and knowledgeable ITM
  specialists
• Relative size of ITM versus domestic cash
  management
• Convergence of trade and treasury management
  within U.S. corporations

3
Opportunities for ITM Providers
Regionally Coordinated Treasury
Regionally Centralized Treasury
Globally Centralized Treasury
Decentralized Treasury
Parent Company Involvement

• Periodic reports on balances / investments
  and cash flow
• Lines of credit
• Policy development

• Treasury policy, risk and tax coordination
• Lines of credit
• Guidelines on FX, etc.

• Manages cash position, provides direction on
  liquidity, risk and tax management
• Funds management

• Focus on global liquidity, cash mobilization
  and deployment, risk and tax management,
  bank selection

4
U.S. Corporate Treatment of International Sales
Corporate International Sales
TRADE
TREASURY

• Objectives
• Increase Sales
• Accelerate Cash Flow
• Optimize the use of Cash
• Minimize Risks
• Simplify Tasks

Direct Exports through Dealers and Distributors
Inter-company Sales

• Financial Terms
• Open Account
• Collections
• Letters of Credit

Sales to Third Parties

• Financial Terms
• Open Account
• Collections
• Letters of Credit

Corporate Cash Flow
5
Convergence of Trade and Treasury
Exporter - Open Account and Document /
Payment (Collections)
Bank

• Benefits
• Exporter
• Streamlines and consolidates trade payments
• Information
• Faster payments
• Access to financing
• Bank
• Transactional / alliance products
• Greater share of corporate trade payment
  business

Treasuryand Trade Platform
Concentration Accounts Eligible Receivable
Pooling Customer Info / Track /
History Discounting - Securitization Export Rec
Risk Mgt (example, forfaiting, insurance)
Bank Platform
Receivables Monitoring Automated
Tracing, Tracking and Collecting
Foreign Bank Role
Interbank Payment Arrangements CHIPS
Dollar Clearing and Payments
Local Clearing Services Foreign Exchange
Services Collecting Tracing Documentation Conduit

• Key Facilitators of this Change
• Trade Payments Becoming Mainstream
• Dissatisfaction with Status Quo
• Technology

6
Treasury Template - Payment Acceleration

• Services
• Pan European or Asian solution
• Key country partnerships (example, Brazil)
• Expansion of networks through partnerships
  (example, IBOS, airline code sharing)
• Focus on corporate cash
• Services bundled or offered
• Overdraft accounts
• Pooling / netting services
• Foreign exchange - strategy / trading / risk
  management
• Best of the breed - multibank participation
• Extension of U.S. cash management

(Cash - Corporate Asset)
Partnerships / Networks
Bank
Bank
Bank
Local Accounts
Local Accounts
Local Accounts
7
Corporate Objectives

• Optimization of liquidity
• Balance sheet management
• Ability to perform corporate treasury functions
  on-line
• Integrating corporate requirements into bank
  platforms
• Effective management of payment flows and risks