A roundup of topics International Treasurer is investigating.
On deck for International Treasurer is learning more about the Corporate Funding Association (CFA). One of its founders is a member of The NeuGroup’s European Treasurers’ Peer Group, which meets next week. The CFA, or “Project CFA” as it has been dubbed, is working to set up a financing cooperative whose sole purpose would be to grant long-dated (5 to 10 years) euro-denominated credit facilities to its corporate members.
The aim of the association is to provide corporates at the high end of the credit spectrum an opportunity to diversify funding sources at a competitive cost—and via an entity with unique credit enhancement features, robust governance and a conservative balance sheet. Moreover, with a eurozone banking license, corporate members would gain dedicated access to the European Central Bank’s (ECB) refinancing operations. At this stage, the cooperative is seeking:
- Corporate groups (i.e., no banks, no insurance companies)
- Entities with an investment grade rating (or equivalent if unrated)
- A minimum gross debt level of EUR300mn.
SWIFT for bulk payments
Speaking of corporates seeking more direct banking system access, at this same meeting The NeuGroup will also hear from treasury operations with recent experience implementing and utilizing SWIFT to execute non-treasury, bulk payments. Once initial corporate SWIFT access is implemented, companies often look into the benefits of migrating centralized bulk payment file transfers (e.g., from payment factory to regional gateway payment bank) to SWIFT pipes as opposed to proprietary bank channels.
Presumably, in the process they would also look to adopt SWIFT-promoted XML standards and those of SEPA for Europe. If it all works as advertised, then one question is what value add does the initial gateway payment bank provides so as to prevent eventual disintermediation of bulk payment services?
These are just two examples of ways corporate treasurers are seeking alternatives to relying on banks to get their jobs done.