act, 020212 final

Chris Skinner

www.thefinanser.com

Corporate2BankRelationships –

Brilliant or Broken?

Interactive Vote

Do you think that, since the crisis began in 2008, the Corporate-Bank relationships you are engaged with are:

1. Better?2. Same?3. Worse?

Corporate2BankRelationships –

Brilliant or Broken?

Past

• Global platforms• Payment Factory• Supply Chain

Management• Working Capital• IFRS vs GAAP• Bank consolidation

• Open Account vs Letter of Credit• SEPA• e-invoicing• Treasury metrics /

treasury workstation

• Standards

Present

• Cash management• FX: Remnimbi v

Dollar • Eurozone • Hedging strategies• SEPA end-date [1 February 2014 ]

• Regulatory change• Risk management• Cloud services• Real-time

forecasting• XML

PwC Treasury Survey 2010• Nearly 80% of participants believe that the financial crisis

has won them greater boardroom attention.• Nearly 70% of participants believe that the crisis has

highlighted the value they create within the business.• Only 20% have secured extra resources as a result of the

crisis.• More than 70% of participants are keen to sustain a long-

term portfolio-style relationship with their bank, though 60% believe their banks would prefer an individually profitable transactional approach.

• The proportion of participants rating cash management and working capital management as highly important has more than doubled (from 35% pre-crisis to more than 70% during and after).

• Risk management tops the list of priorities for the future.

Top 10 risks for 2012(2010 results)

1. Macro-economic risk (4)2. Credit risk (2)3. Liquidity (5)4. Capital availability (6)5. Political interference (1)6. Regulation (3)7. Profitability (-)8. Derivatives (7)9. Corporate governance (12)10.Quality of risk management (8)

Source: PwC Banking Banana Skins 2012

FutureEconomicPolitical Social Technological

Dodd FrankVolcker RuleDurbin AgreementVickers ReportMerkozy EurozoneEast-West China divideUS elections (2012)French elections (2012)UK elections (2014)

Eurozone uncertaintySovereign debt issuesRemnimbi vs DollarCIVETS / Growth8New AfricaRussia WTOChina inflation bubbleChina 2018 or 2047India post-2020

Global gossipingCrowdfundingSocial financeOccupy Wall Street etcWikileaksAnonymousGlobal connectivity 1:1New economiesVirtual currencies

MobileContactlessTablet PCsSocial networkingSocial mediaAppsConnectivityChips in everythingWireless touch

Change VisionBoring banking vs casino capitalismNew regulationsNew economiesMicromoneyHybrid value managementGlobal currencies (Bitcoin)

• Products are apps, manufactured in such a way that customers can put them together to suit their lifestyle.

• Processing is open sourced, offered to anyone to plug and play with their offerings through APIs.

• Retailing is based upon competitive differentiation through big data analysis to deliver contextual personalisation.

The real issue =

complexity

“Even the financiers themselves couldn't understand the implications or robustness of the financial derivatives they were trading, or even how to properly price them.”Prophets Against Profits? What Occupy Wall Street

Misses 

OTC Derivatives

Commercially robust versus speculative

trades?

FX hedging is key

What does a bank need to

do?

Barclays Treasury Survey 2011

Barclays Treasury Survey 2011

“There is a clear message here for banks: in order to be the risk management partner of choice, banks need to distinguish themselves through more than just price. Corporate treasurers value ideas and quality of coverage.”

Strategic

Tactical

Long-term

Short-term

Staff

Supervisory

Management

Executive

CEO

Physiological

Safety

Belonging

Esteem

Self-Actualisation

Trusted Advisor

Strategic Partner

Preferred Supplier

Solutions Provider

ProductVendor

Future

• Dealing with uncertainty

• Finding returns through growth markets

• Managing stagnant or contracting old markets

• Recognising market failures and issues

• Knowing and managing risks

• Getting good advice

Does your bank care about

your business first and theirs

second?

Interactive Vote

Does your bank care about your business first and theirs second:

1. Yes 2. No3. Abstain

Chris Skinner

www.thefinanser.com