A good time to be a treasurer?
The opening session of The Treasurers’ Conference (TTC), held in Edinburgh last month, asked the assembled treasurers to focus on getting the priorities right for the treasury department. The session sparked a complex and farreaching debate, but certain themes stood out for the delegates, both in that session and over the whole of the conference.
It is clear that treasurers are keen to understand the phenomenon that is private equity whatever their private views of the merits or otherwise of the industry. Treasurers may be able to learn some lesson from the private equity approach to leverage and to risk appetite. Beyond leverage, treasurers should be well placed to understand and assess private equity’s claims on how it creates shareholder value and its appetite for risk. Treasurers are immensely well equipped with financial risk management skills. And while they grapple with the well understood risks of liquidity, foreign exchange and increasingly inflation, the question arises whether treasurers should be looking beyond their traditional risk and responsibilities to take on enterprise-wide risk responsibilities.
It is still not certain whether treasurers can transfer the models they have developed in the finance department to help manage risk on a wider front. They grasped the challenge of pension risk management, but are they able and eager to take the lead on the next corporate risk crisis? All of TTC demonstrated that treasurers are aware of the problems that are facing their employers. But it is one thing the treasury profession knowing that, and a different matter entirely to communicate the treasurer’s knowledge, skills and competencies to the rest of the organisation.
Treasurers have to ensure that they are not hidden in a backoffice. They have to demonstrate that they are commercially attuned and can add value to corporate business models which are under pressure and changing rapidly. One example of this is the emerging issue of financial supply chain management where treasurers can work with other parts of the business and use their well-developed skills to reduce liquidity risk and enhance cashflow management. These are just some of the host of demanding subjects that treasurers are being asked to deal with. One question raised at the conference was whether this was a good time to be a treasurer. Only working treasurers can answer that question. But what is abundantly clear is that it is an eventful and interesting time for the treasury professional. In that sense alone, the rewards must be high.
PETER WILLIAMS
Editor
See Conference report, page 12
Trustees ignore pensions trigger
At least 30% of pension schemes are prepared to set funding targets below the ‘trigger’ levels set out by the Pensions Regulator under the statutory funding objective (SFO) regime, according to a survey by Mercer Human Resource Consulting.
SEC offers non-US companies easier route to deregistration
New rules from the Securities and Exchange Commission (SEC) on foreign companies wanting to deregister from the US became effective on 4 June 2007 and are as broadly outlined by the proposals made by the US financial regulator in December 2006.
The £11.1bn takeover of Alliance Boots represents not only the latest in a string of megabids for FTSE 100 companies – a dozen blue chip London stocks have now been taken out over the last two years – but also the single biggest private equity-financed bid for a British company.
GE Capital is a regular issuer with large outstandings and needed to tread carefully to ensure that investors were aware of its strategy and likely future approach.
What does Scotland have to do to retain its position as a leading financial services centre? With The Treasurers’ Conference taking place in Edinburgh in May, three ACT members intimately concerned with the corporate scene in Scotland gave their prognosis for the future of the country and its businesses.
Britain beats the world
Britain’s financial services industry is a worldbeater and should be applauded, according to Sir Digby Jones, the former director-general of the CBI and now an adviser to Deloitte.
Mark Wood, Chief Executive of Paternoster, tells Peter Williams why he expects businesses to transfer their pension schemes to his balance sheet.
The roundtable reflected on the issues raised in previous articles in the series looking at the importance of developing a risk framework; translating objectives into an appropriate asset allocation strategy – including agreeing a risk budget and managing unrewarded risks; trustee decision-making powers and the use of benchmarks.
Wolseley recently reviewed and replaced the technology employed within its treasury department to increase efficiency and meet the reporting and control demands imposed by the current regulatory environment. Its review of the options available addressed some of the key issues in treasury management systems that large businesses, operating with a small treasury, face today.
Graham Buck looks at how the corporate desire to collect cash as promptly as possible is prompting a renewed look at finance techniques aimed at easing the tension.
The growth of the over-the-counter derivative market – now totalling $285 trillion – has prompted a number of developments. A new set of ISDA Definitions reflects market developments and consolidates the various Supplements into one document, consolidating the structure and adding currencies. Definitions introduce or update provisions to help parties easily document transactions such as swaption straddles, mark-to-market currency swaps, and arrears-setting transactions and incorporate ISDA-published matrices to reduce the administrative burden.
Under the new IFRS 7 standard, organisations must conduct sensitivity analysis on how market changes relating to financial instruments could affect performance. Treasury departments will need to take practical steps to comply properly.
The debate over the very different regulatory approaches of the UK and the US has grown increasingly acrimonious in recent months. In particular, Clara Furse, the Chief Executive of the London Stock Exchange (LSE), has vigorously denied claims that the success of London’s junior market, AIM, owes much to lax regulatory standards.
Engaging with the ACT, other representatives of corporate preparers and the standard setters, the Corporate Reporting User Forum is determined to ensure the views of users are heard. In particular, it has strong opinions on fair value, the conceptual framework and financial statements presentation.
Globalisation seems an inevitable fact of life for national governments, large companies and even smaller businesses. Over the last 14 years the global economy has doubled in size. It has been predicted that China’s economy will have eclipsed Japan’s by 2012 and will possibly overtake that of the US as well. How should countries and companies react to these economic forces?
It has been many years since the last detailed survey of the remuneration of treasury professionals in Britain’s leading corporate businesses. The ACT and the Curzon Partnership, a leading UK recruiter of senior treasury executives, therefore felt it was timely to carry out a new, detailed and formal appraisal of treasury earnings.
