A roundup of topics International Treasurer is investigating.
The first morning of the EuroFinance conference in Miami yesterday featured a discussion about how to rationalize sprawling numbers of international bank accounts. George Zinn, treasurer of Microsoft, and Lawrence Hirsch, assistant treasurer at AES, recounted how they went about trimming their thousands of overseas bank accounts and standardizing processes and data reporting for the ones that remained. While a work in progress for both companies, they reported that having the process well underway when the financial crisis struck allowed them an important degree of visibility that helped them ride out the storm.
Also at EuroFinance, RBS unveiled a new investment option for treasurers looking to park operating cash but who are dissatisfied with miniscule short-term rates on cash investments. The new product, called the Yield Call Deposit Account (YCDA), allows access to money on deposit but, if it is left beyond a certain amount of time, the yield on the account steps up. The instrument can be structured with different final maturities and interim triggers. Treasurers, RBS says, get liquidity and the potential for higher yields on balances they may not need to draw (and they don’t have the logistic headache of having to roll their short-term investments every few days or week). RBS benefits from getting a more-stable deposit base. The product is currently offered for euro accounts, but will soon be rolled out for dollar and sterling.
Finally, International Treasurer is looking at two recent tax changes of interest to treasurers. The first is the change to the “economic substance” standard in the recently passed US health care legislation. Previously, transactions (such as Son of Boss) that failed this standard had fines levied at the court’s discretion. The health care bill sets a strict 20 percent penalty. The second change is in withholding treatment of equity derivatives like contracts for differences and total return swaps. These will now be subject to withholding the same as cash equities—part of the UBS-precipitated crackdown on tax avoidance.