Further evidence that treasury centralization is no longer fixed seen in Singapore and elsewhere.
A recent trip to Singapore to solidify plans for a NeuGroup regional treasurers peer group for Asia provided further validation of shifting treasury organizational trends. One of the takeaways from phase 1 of the World-Class Principles of Global Cash Management project The NeuGroup conducted in conjunction with Citi for the Global Cash and Banking Group is that it is world-class to rethink execution and even management of centralized treasury activities. This can be done on a regional basis, or treasury functions can centralize globally using existing regional treasury or shared service centers. Such reorganization thinking is a trend we have seen discussed repeatedly across all The NeuGroup’s Peer Groups.
A view on the world from Asia
Meeting with leaders of Singapore regional treasury centers from our network of peer group member companies, we heard many tell us that they are indeed involved with managing global responsibilities from south Asia, including at least some elements of FX management and emerging markets fixed- income investments. One multinational was bringing their head of capital markets operations over for a period of time to gain a better understanding of funding opportunities in Asia while managing global funding during the temporary assignment. Another firm has migrated back- as well as front-office treasury activities to India, which covers much of the globe in day and night shifts. Other regional leaders are coordinating with their colleagues at centers in Europe, who have taken on global cash or payments management responsibilities.
Additional evidence
A survey of The NeuGroup’s Treasurers’ Group of Thirty (T30) in advance of their Deutsche Bank-sponsored meeting this week revealed that a full 43 percent of respondents had certain treasury activities centralized virtually (i.e., performed by multiple individuals that are not typically in the same office location). There were also nine activities that were identified as performed on a global basis from locations outside the US head office, including:
- Global cash management from the UK
- In-house banking and payments from Switzerland
- Cash management from Spain
- Global banking systems and operational coordination from London
- Payables from both Texas and India
- Short-term borrowing from Canada
- FX management from Singapore
- Intercompany loan administration from the UK
- Investment management from Singapore.
With globalization trends accelerating toward offshore markets, where cash flow tends to be at greater risk and information technology enabling more integrated remote access to data and applications for treasury, we expect to see more of this.