Seize the day
The idea that anything good might come out of the credit crunch may seem at this stage of the game little more than wishful thinking. But for the treasury profession a refocus by the board on the financial issues that drive the business and shareholder value should bring a spotlight on the role of treasurers and the contribution that they make.
This was undoubtedly the sentiment at the recent talkingtreasury event in Amsterdam. Treasurers from across Europe met to reflect on the credit crunch, strategic risk management, and treasury as an integral part of any successful business. In the days when borrowing money from banks and raising finance in the capital markets were as easy as taking candy from a baby, it was perhaps unavoidable that the role of the treasurer would slip down the corporate worry list. A trend emerged for treasury to merge with other departments.
Those days are now gone. As we point out in the cover story (see page 24), corporate treasurers now face the question of how best to fund their companies in an uncertain environment. Credit spreads have already widened considerably, inevitably affecting businesses as the returns from any project must now be higher to justify the investment.
The key aims for treasurers with funding pressures should be twofold: to have various funding options at their disposal, and to determine which assets will provide them with immediate value.
The CEO, along with the rest of the board, has a renewed interest in the output of the treasury department, especially cash and liquidity management. The higher profile of the treasurer means bigger opportunities, but these won’t be handed to the profession on a plate; they have to be seized and that could mean discovering a whole new set of skills alongside the technical aspects of treasury.
The basic functions of treasury are vital and need to be executed properly. But there is an opportunity to go further. Treasurers need to learn to sell their own expertise to other parts of the organisation. They also need to appreciate that what may be blindingly obvious to them isn’t to others, so polishing those communication skills is crucial. This is not only about promoting treasury within the company; it is also about career progression. Do senior treasurers want to be tucked away in the back office confined purely to the treasury function (important though that is), or to become an integral part of the business?
Different situations and structures apply in every organisation, but there is now a genuine opportunity for the treasurer to gain greater influence and help improve shareholder value: now is the moment for treasurers.
PETER WILLIAMS
Editor
See Adding Value, page 40
Companies and the wider economy have so far been spared the worst effects of the credit crunch, but will increasingly feel the pain over the
coming months, a member of the Bank of England’s monetary policy committee (MPC) has warned.
Our newspapers of record do a fine job of alerting us to financial news, but do you sometimes seek a little more depth of reporting? Now and again it pays to go back to the source material and the regular Bank of England Quarterly Bulletin is a good example. The report provides a comprehensive and independent round-up of financial market conditions in both the equity markets and the credit markets.
In essence a treasurer should not act any differently dealing with change in a volatile world as he would in a non volatile world. His, or her, role is to support the business in delivering its strategic objectives, whatever they may be, though how the business will deal with change is one for the business leaders.
At the advent of the credit crisis in July last year, few would have predicted that its impact would be so great or that the bank debt market would still be crippled eight months later. The world’s big banks and broking houses have written off over $200bn since the collapse of Northern Rock last summer, Bear Stearns has fallen and we’ve seen the demise of IKB in Germany. Add to that the derailing of a number of high-profile hedge funds and the extent of the problem for the global economy becomes clear.
It may be the shape of things to come in 2008 when a flotation in Saudi Arabia becomes one of the beacons of the corporate finance market in the first half of the year.
Hichens, Harrison & Co, which was working in the City during the reign of “mad” King George III, has been taken over by the Indian financial services group Religare, becoming the first Square Mile broker to fall to a takeover from the subcontinent.
After working for some of the biggest FTSE 100 Blue chips, Tom Jack Is enjoying a new challenge at a less familiar name, fast-growing mining group Kazakhmys, as he tells Graham Buck.
Greater regulatory convergence, improved supervision of the financial markets and an EU-wide early warning system are all possible governmental responses to the credit crisis. Europe and the US are also rumoured to be devising ways of improving co-operation to develop measures that would help prevent any future financial crisis.
In an environment where unsecured funding demands high credit premiums, and where investors value the lower correlation of corporate business models with the financial sector, covered bonds could become an attractive funding tool for corporates.
In the second of two articles, Jonathan Rigby, Daniel le Blancq and Dean Godwin set out to demystify the offshore world and highlight how offshore financial centres might benefit your company.
While the credit crunch was snapping away at many businesses in the first quarter of 2008, Circle Anglia, one of the UK’s biggest housing groups, secured the largest ever social housing sector financing deal. The £1.7bn deal will be used to fund the rapidly expanding housing
group over the next five years.
At the talkingtreasury in Amsterdam in April treasurers gathered from all over Europe to discuss their response to the continuing credit crisis, strategic risk management and how treasury is an integral part of the business. The event was organised by the ACT in partnership with the Dutch Association of Corporate Treasurers (DACT). The fourth in the thought-leadership series was sponsored by JPMorgan Asset Management.
Should you choose a treasury system primarily because it most closely matches the needs of your treasury (and so enables the department to contribute optimum value to the business) or because it meets the global infrastructure and business needs of the group? The ideal system does both.
The 2008 conferment ceremony was sponsored by Reuters and took place at its Canary Wharf offices in London. Following a welcome by David Grigson, Chief Financial Officer of Reuters, the ACT’s President Malcolm Cooper welcomed those present, and congratulated the successful candidates on their achievement.
