BMG’s notional Cash Pool & Synthetic Hedging：BMG的名义现金池的和合成的套期保值.ppt

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1、New York Cash Exchange 2011Pall Corporation Approach to Managing Global Liquidity,Pall CorporationKevin KilkellyAssistant Treasurer,Bank Mendes Gans N.V.Mrs.K.I.KombrinkExecutive Vice President,Global Liquidity Management-Notional Cash Pooling,3,Pall Overview,Financial Statistics F 10Revenue:$2.4BPr

2、ofits:$241.2MOperating Cash Flow:$377.9MCredit Rating:Moodys:Baa1/P2S&P:BBB/A2,Operational Overview Pall(NYSE:PLL,S&P500 company)is a leading supplier of filtration,separation and purification technologies across the broad spectrum of life sciences and industry.The companys engineered products enabl

3、e process and product innovation and minimize emissions and waste.Pall conducts business in over 30 countries worldwide,4,Treasury Principles,Cash is a corporate assetProtect this assetEnhance shareholder valueCentralized control with decentralized executionStrategic direction from Corporate Treasur

4、yTactical execution on transactional levelExecution via Regional Financial Service CentersMacro level overview of responsibilitiesSound control environment governing all cash movementsOptimizing cash resources,5,Requirements for Operational Success,Visibility&TransparencyDaily Cash ReportingWorking

5、Capital NeedsCash Flow Forecasting(Pool Participants),Centralized Liquidity ManagementGlobal Cash PoolingIn-Country Target BalancesGlobal SettlementsGlobal Funding,Sound Control StructureEffective&standardized global policies and proceduresConsistent administration&executionProcedures always in plac

6、e before executionSarbanes Oxley compliant Internal Audit reviews,Information TechnologyEliminate redundanciesReal-time activity reportingConsistent application of controlsIncreased productivityTranscends time zonesInternet based portal:Account opening/closingSelf Service Portal,Decentralizedexecuti

7、on,Centralizedcontrol,6,Create a global account structure,while streamlining&maintaining a local banking infrastructureObtain centralized visibility and control to access global cash to fund business growthEliminate all in-country borrowing facilitiesEnable multi-currency off-set and eliminate FX tr

8、ansactions to manage liquidityImprove returns on overnight deposits/reduce costs on borrowingsEstablish global reporting capabilities of all global bank accountsAdopt a solution that complies with internal standards and security requirementsManage overall Cash Pool position via a single currencyOver

9、come local resistance to a global solution,Objectives-Centralized Liquidity Management,7,SolutionImplement a Global Multi-Currency Cash Pool Meets Treasurys requirementsGlobal Cash Pool keeps local infrastructure intact but has the flexibility to enable changes as dictated by business needsCriteria

10、for participationCurrency is freely convertible Legal entity is permitted to open an account(local and/or foreign currency)offshore,Centralized Liquidity Management,8,Palls Cash Pool,Began operations in July 2008 Pall Global Treasury,Port Washington,New York Current number of Cash Pool participants:

11、29 Current number of Cash Pool accounts:34 Countries:19Pooled currencies:12,9,Provides visibility and control of global cashProvides high flexibility to meet short&long term cash needsMultiple currencies can be pooled daily from every region of the globe Automated connectivity between Cash Pool acco

12、unts and local bank accountsAll cash in excess of working capital no longer remains idle in-countryShort-term funding vehicle for participating group companiesEliminated most non-US external debtSimplified new revolving credit facilityTreasury can invest/borrow in currency of choice,Global Cash Pool

13、 Benefits,10,Bank“Pledge”as opposed to“Cross-indemnities”thus avoiding inter-company loans Intercompany loans eliminatedLegal entities own bank accountsCash Pool bank sends statement to legal entity monthly charging arms-length interestLegal entity reconciles g/l to the bank statement as if it were

14、a typical in-country bank accountAbility to access the overall Cash Pool balance in a single currencyAdvantageous borrowing rates for local entities(eliminate local bank margins)Full interest compensation rather than interest enhancement(one currency rate per currency based on overall currency posit

15、ion)Use the Cash Pool for acquisition finance transactions,Global Cash Pool Benefits(contd),11,Internet based access enables:Access and visibility to all pooled funds from one platform.Third party accounts can be included.Entity funding initiated from one platformAdministrative flexibility,Global Ca

16、sh Pool Benefits(contd),12,Utilization of Cash Pool for funding requirementsPay down external debtEliminate in-country credit linesWithholding Taxes on account overdraftsMonitor tax treaties with internal tax to assure the most advantageous treaty network is applied Accounting“Buy-in”from all discip

17、lines to assure the Cash Pool did not create accounting entry complicationsReplacing Inter-company loans with deposits/overdrafts within Cash PoolPotential to offset on a consolidated basisLocal Legal Entity Buy-InEconomic benefitEducation and communication with local entities to assure compliance w

18、ith the new structure,Global Cash Pool Strategies,13,Establishing automated two-way transfersDetailed process required assistance from local entity,local bank in conjunction with BMG and Corporate TreasuryContinual adjustments to targets/triggers to assure minimal liquidity remains in-country.Excess

19、 funds no longer remain in local bank accounts,but in cash pool accounts.Accurate cash forecasting is critical.Diversify investments Use Cash Pool to hedge currency exposures via plain vanilla FX Spot deals,Global Cash Pool Strategies,14,Global Cash Pool overview,SGD,USD,GBP,CHF,JPY,EUR,37 currencie

20、s supported,All account balances in multiple currencies are viewed as just one account with one balance=single transfer to steer pool,15,Group Companies,Pool bank,Treasury,Liquidity management model for companiesIntegrating requirements,Relationship banks,Centralization,Funding orInvestment,1,Cash P

21、oolBank account,Cash Pool bankaccount,Japan,UK,Local customeraccount,Localcustomeraccount,16,Group Companies,Treasury,Liquidity management model for companies Integrating requirements,Relationship banks,Funding orInvestment,1,Japan,UK,Pool bank,Centralization,Translation,JPY 550M,GBP 6M,(USD 3M),+,=

22、,2,Local customerBMG account,Local customerBMG account,17,Group Companies,Pool bank,Treasury,Liquidity management model for companies Integrating requirements,Relationship banks,Centralization,Funding orInvestment,1,Japan,UK,2,3,JPY 550M,GBP 6M,USD 0M,+,=,USD 3M,+,18,Global Cash Pool Solution,Local

23、customer account balances,Cash PoolBalance(3),USD,CHF,GBP,SGD,EUR,JPY,Cash Pool balance(1),USD,TreasuryFunding(2),USD,=0,19,Cash Poolconditions,Set-off,USD,USD,USD,Cash Pool USD accountbalances,Step 2,Step 4,Step 1,USD,USD,USD,USD,20bp,20bp,20bp,PositiveInterest result,10bp,Global Cash Pool:True int

24、erest compensation,Step 3,Investment rate=e.g.20bp,USD,Borrowing rate=e.g.30bp,20,Global Cash Pool-Considerations,Regulatory Law:Thin capitalization rules and stamp duty may apply in case of intercompany loansTransfer Pricing:set Cash Pool margins at arms length and clearly document to avoid penalti

25、esNotional pooling and full off-set is allowed in the Netherlands.No cross-guarantees required under central banking regulations Tax:Withholding tax could apply on interest charged.In Netherlands no withholding imposedTax authorities could view extended overdrafts on a cash pool account as a disguis

26、ed liability Accounting:No intercompany loan administration and FX Swap contract administrationApply full off-setting on the balance sheet,21,Cash Pooling-Is it right for your company?,Gather DataDo a feasibility study make a case to management via a cost/benefit analysisDefine an effective solution

27、 work closely with corporate tax and legal advisors(physical/notional or both,Cash Pool leader,pool margins,countries,etc)Analyze Tax and Regulatory aspectsReview each countrys jurisdiction specific rulesNegotiate fixed Cash Pool fees with providerObtain Crucial“Buy-In”From global operationsStep-by-

28、step Implementation account set-up,legal documentation,set authorities,define processes for participantsManage from a central location(USA,Europe),22,Feasibility Study,Required Information:Balances(debit&credit)for a representative period(e.g.1 month)of a selected group of companiesFor all accounts(

29、local and foreign currency)including local bank interest conditionsWorking capital loans you would like to dismantleLocal credit lines and cost thereofLocal deposits with 3rd party banks,23,Cash Pooling-High Level Summary,A centralized Treasury fosters:Global adoption of standardized policies and pr

30、oceduresA common approach towards global liquidity managementA sound foundation that enables the implementation of a robust global Cash Pool productGlobal Cash Pool enables:Aggregation of different currencies from different countries into one common currencyCash in excess of working capital at the i

31、n-country level to no longer remain“trapped”or subject to local investment/borrowing vehiclesShort term funding in the currency of choice without the traditional reliance of inter-company loan structures,Global Liquidity Management-Netting,25,Objectives,Add discipline to intercompany settlement proc

32、essReduce the number of intercompany flows to reduce FX and transfer cost one monthly settlement per group companyReduce/avoid cut off time and value dating issues guaranteed settlement with proper value dateImprove and simplify the monthly reconciliation process Internet based access for reporting

33、and file upload/download purposesIntegrate netting with other cash management requirements liquidity(investment/funding)management hedge policy,26,Global Multilateral Netting,Multilateral netting is management of cross-border payments among multiple entities,resulting in a single net receipt or paym

34、ent to each participant in the participants functional currency.The a process designed to organize and simplify the settlement of inter-company payments on a fixed customized periodic schedule.(third party payments can be included),27,Pall implemented Netting in November 2008 No bank accounts need t

35、o be openedIncreased efficiency in managing inter-company flowsImposes standardization and discipline across the groupReduce payments between legal entitiesCentralized versus decentralized FXCost savings in:Transfer costs reduced based on reduction in the number of settlements(approx.:80%-90%)FX cos

36、t reduced based on reduction in transactions(approx.:80%-90%)Elimination of value day loss,Global Netting Benefits,28,Gross vs.Net-Intercompany Flows,Average Reduction of Intercompany flows:Before netting:gross payment volume between group companies;per annum:USD 1.2BAfter netting:net payment volume

37、 of intercompany payments between group companies;per annum USD 590MReduction of 52%!,29,Average Reduction of Intercompany payments:Number of payments before netting:Per annum:6,405Number of payments after netting:Per annum:674Reduction of 89%!,Gross vs.Net-Intercompany Payments,30,Global Netting-Me

38、chanics,UK,AU,DE,SG,US,Before,UK,AU,DE,SG,US,After,Nettingcenter,31,Global Netting-Transactions,SALESTradeVendor FINANCIALInter-company loans&interest Royalties÷nds Management&service-fees Internal FX hedging contracts External FX hedging contracts,32,Global Netting Monthly Schedule,1:Send int

39、er-company and vendor invoice payments to Netting center2:View preliminary results and make changes when needed3:Execute Final netting FX Spot deals4:Run final netting5:Execute all Netting settlements same day value6:Reconcile AP&AR,Netting:Is it right for you?,33,Gather DataDo a feasibility study m

40、ake a case to management via a cost/benefit analysisDefine an effective solution work closely with Accounting(Cash Netting leader,currencies,countries,etc)Obtain“Buy-In”From global operationsStep-by-step Implementation,legal documentation,set authorities,define processes for participants.Manage from a central location(USA,Europe),Feasibility study:What is needed?,34,Intercompany Transactions for a representative period(e.g.1 month)of a selected group of companiesFor all countries¤ciesVendor Payments(International),35,QUESTIONS?,Pall&BMG,