Staying in Control

In increasingly challenging circumstances, the role of treasury is becoming more important: ensuring liquidity, efficient capital allocation, and risk management. Varying regulatory requirements in different target markets add further complexity. For example, liquidity from branches and subsidiaries cannot always be fully redirected and utilised within the group.

For the parent company’s treasury, it is therefore all the more crucial to have full, real-time transparency over the liquidity position of the entire group and its subsidiaries. Traditional reporting across various banking relationships often fails to meet these demands. Reports from many banks are only available on specific dates, and the manual aggregation and preparation of data in Excel spreadsheets is time-consuming.

Using Mirror Accounts

Multi-Currency Notional Pooling, an overlay concept, can provide treasury with the necessary visibility. Mirror accounts in the same currency are maintained at a specialist bank for all of a company’s foreign currency accounts, allowing treasury to access funds in the desired currency. These foreign currency accounts can include up to 31 different currencies. There are no limits on debit or credit balances.

Interest on debit and credit balances is calculated based on the overnight swap rates of the respective currencies. This eliminates the need for swap deals or FX transactions when managing foreign currency positions, thereby reducing associated risks and, above all, costs.

Multi-Currency Notional Pooling operates independently of specific banks and can be tailored to a company’s individual requirements. It provides full transparency and easy access to global liquidity reserves through a single system. Treasury thus retains control at all times and can respond swiftly to changing demands.

Ongoing discussions around customs issues are prompting some companies to consider relocating production facilities closer to their sales markets and diversifying their supply chains. M&A activities play a key role in this context. Multi-Currency Notional Pooling enables companies to provide equity capital internally with ease, thereby optimising their financing structure. Following a merger, it offers an immediate and consolidated overview of group-wide liquidity – a decisive advantage for fast and informed decision-making in the post-merger phase.

Pooling allows liquidity reserves to be used far more efficiently. There is no need to maintain cash reserves in individual markets; instead, targeted investments can generate returns above the prevailing interest rates.

Maximum Control

In an increasingly complex economic and political environment, treasury must be highly flexible to respond quickly to new requirements. Multi-Currency Notional Pooling expands the treasury toolkit with a solution that enables optimal control and management of liquidity – independently of banking relationships and in real time.