Weekly roundup - updates on treasury matters relating to the coronavirus


Message from the Chief Executive

As I mentioned last week, these exceptional times demonstrate quite clearly the importance of the treasurer and their contribution to business and society. Liquidity is the name of the game, and the ACT continues to work closely with its members and other stakeholders to support them as much as possible in what is for many an entirely new and very stressful situation. Last week we met with our Middle East advisory panel and got a good view of life and treasury matters in the region, and we’ll be speaking to the major US treasurers next week as part of my role with the NACT. We continue to connect with the rest of Europe via the EACT, and our East Africa panel meets soon again too. We’re also engaging with our Asia panel, and ensuring all our members and contacts worldwide have the ability to connect together through our virtual International Treasury Week coming up in May. Naresh Aggarwal reports in his blog below what’s been happening since last week though, and I’d like just to emphasise that we remain here for you through these difficult times, but our strength lies in our community and the knowledge-sharing we can access. So please do keep us informed of what’s happening in your world, as it’s critical that we represent you fairly and accurately. We see, naturally, some significant differences in impact on your business models, and hence liquidity, and whilst wanting to represent you as a whole we also want to represent those sectors who are struggling more than others – it’s about survival of the whole ecosystem here. So far, so good, as HM Treasury and the Bank of England have been listening to us and other stakeholders and we’ve seen positive developments as they ‘finesse’ the programmes already announced, and launch a new one.

All kudos goes to them for having been decisive and getting schemes out there with speed. There is of course a need for more, but in the scheme of things I think they have done a pretty amazing job, and they are engaging with us and really want to hear the treasurer’s voice, which is very encouraging for the future. I’m also impressed with the positive actions of many of the banks, and our new treasury briefings for bankers, launched last week, will continue. I’d also like to once again thank you for your professionalism and integrity, hard work and commitment, in these difficult times especially, as you keep your businesses in the best financial health possible. It’s been great speaking to many of you personally over the last week or two, and I am always available should you want to have a chat.

Caroline Stockmann


The Policy and Technical team has been speaking to a number of treasurers over the last few weeks, with more to come, to understand what issues they are facing and what areas the ACT can help. We are also talking with the main banks to understand how they are responding to the COVID-19 crisis. At the same time, we have been in a number of conversations with HM Treasury, the Bank of England, the CBI, the City of London and UK Finance. Through these forums we have been able to ensure that the views of the treasury community are heard by policymakers from a number of different channels.

A list of useful material from the ACT, the Regulators, the Government and Others can be accessed from the ACT Knowledge Hub.

General overview

Another busy week for treasurers and the government with a new programme to help the “stranded middle” tier of companies and some refinement of the existing CBIL programme for smaller businesses.

The new Coronavirus Large Business Interruption Loan Scheme (CLBILS) will provide a government guarantee of 80% to enable banks to make loans of up to £25m to firms with an annual turnover of between £45m and £500m. This should give banks the confidence to lend to many more businesses which are impacted by coronavirus. Facilities backed by a guarantee under CLBILS will be offered at commercial rates of interest. More details here.

Many treasurers will be impacted by March 31 year ends, trying to make sense of the last few weeks and what the crisis means for their liquidity projections and FX hedging programmes (as many exposures may no longer exist).

Feedback from Treasurers thus far

Key messages we have heard include:

  • Treasurers are having to go back to textbooks – with what they had said previously about capital structures, share buy-backs etc. going ‘out of the window’.  Investors have some general concerns that some corporates may be under-capitalised (e.g. as a result of recent dividend policies and share buy-backs) andthat this could lead to potential covenant breaches as a result of the sharp economic downturn.
  • The bond markets remain open but the cost is going up with rates rising 2% despite a lowering of long term interest rates
  • Many treasurers have been taking proactive action – talking with HMRC, and the Pensions Regulator on how to manage their payments in the light of the short-term liquidity challenges they face


  • The banks continue to be supportive and many treasurers are being proactively approached by their banks.  Smaller businesses, however, seem to have been experiencing more difficulties than larger businesses when accessing banking services.
  • Treasurers continue to be split between those being encouraged by their boards and investors to fully draw down on committed facilities to those taking a more measured approach and only building a small buffer to manage shortfalls in liquidity
  • A number of treasurers have been able to increase their borrowing facilities and add new lenders
  • Comfort that the banks do seem to be responding to concerns over the (reduced) need for personal guarantees as part of the refined CBILS programme, though the number of successful applications still seems too low compared with what HM Treasury and the business community are looking for
  • A number of banks had initially been affected operationally through the use of offshore teams which had impacted their customers.  Banks seem to have resolved many of these issues.

Liquidity and cash management

  • Companies seem to moving into three clear groups – those:
    • with sufficient liquidity to cover most likely scenarios;
    • who feel they can access additional funding from existing stakeholders and the various government schemes; and
    • who are unsure if they will survive the economic downturn
  • Deposits being placed overseas to reduce country and bank risk (especially those based in non G20 countries)
  • Share buy back plans either being scaled back or cancelled; cancellation of dividends or re-emergence of scrip dividends.

Cash forecasting / modelling

  • Concern that any recovery will be an elongated U shape, that sees growth taking longer to commence and longer to get to levels most of us have become familiar with
  • Increased frequency of cash forecasting, though a concern that the results even only a month out may be highly inaccurate
  • Many treasurers receiving out of date information on future payables and receivables as information slows due to working from home and other operational challenges
  • Tax will have an impact on liquidity, e.g. VAT and it will be a challenge picking apart the cashflows, even for those companies that are able to benefit from the possibility to defer VAT payments falling due for payment in Q2/2020.

Access to government schemes

  • The number of successful applications to all of the government schemes is low. Part of this is the time it takes to complete the necessary documentation and also a number of applications have failed key criteria (such as minimum drawings)
  • Banks and law firms seem well informed and able to help the larger corporates navigate the various schemes

FX markets

  • After the tighter trading conditions seen in mid-March, the FX markets seem to continue to be functioning although spreads in some currencies have widened slightly
  • Some companies have closed their FX positions either because the exposures they were hedging have gone or their FX contracts are in the money and the extra liquidity generated by closing out these derivatives is considered worthwhile

Quotes we have heard include:

  • It’s been relentless
  • We’ve been looking under every stone for ways to cut outflows and accelerate receivables
  • When should I assume a recovery is underway?
  • I’m normally in 5-6 meetings each day – how am I expected to make progress?
  • The treasury team is now front and centre. No one used to ask about covenants but it’s flipped around now and the focus of many people across the organisation
  • Having to deal with analysts – our ‘moment in spotlight’ is exciting but stressful
  • An investor asked why I hadn’t drawn down fully on my committed facilities

Key announcements from UK regulators

  • On Friday (03/04), the Bank of England’s (BoE) Prudential Regulation Authority (PRA) and the UK Financial Conduct Authority (FCA) published a joint statement setting out their expectations for firms’ Senior Managers and certification regimes during the COVID-19 pandemic with temporary arrangements for Senior Management Functions (SMFs).  
  • In a joint statement by the FCA, FRC and PRA (https://www.fca.org.uk/news/statements/joint-statement-fca-frc-pra) they strongly encouraged investors, lenders and other users of financial statements to take into account the unique set of circumstances arising from Covid-19 which might result in uncertainty in companies’ financial positions, potential delays in the provision of financial information, the need for auditors to undertake additional work to support their audit opinions and the increased use of modified audit opinions, including qualifications arising from scope limitations. The Government announced it’s intention to review the insolvency laws governing ‘going concern’.
  • UK banking authorities (Financial Policy Committee, Bank of England, Monetary Policy Committee and Prudential Regulation Committee) have acted to reduce pressure on banks to restrict the provision of financial services, including the supply of credit and support for market functioning. Noting these actions, the FCA, FRC and PRA strongly encourage lenders and other parties to take into account these circumstances in responding to potential breaches of covenants arising directly from the coronavirus pandemic and its consequences, given the common goal that the financial system should be a source of strength for the real economy during this challenging period

The Working Group on LIBOR transition has reiterated the end 2021 deadline but acknowledged the pressure placed by COVID-19 on some interim deadlines. 

Views from across the world

As a member of the International Group of Treasury Associations, and the European Association of Corporate Treasurers and working with our colleagues in the US National Association of Corporate Treasurers we are keeping an eye on developments overseas.

Items that caught our eye include:

  • On Monday (6/4), the European Commission announced that it had redirected €1 billion from the European Fund for Strategic Investments (EFSI) that will serve as a guarantee to the European Investment Fund (EIF) in order to provide liquidity to SMEs and small mid-cap companies affected by the COVID-19 outbreak. 
  • On Friday (3/4), the Centre for Tax Policy and Administration at the OECD, published an article highlighting some recommendations to tax authorities on implications of the COVID-19 crisis for cross-border workers.  
  • The French Financial Markets Regulator (AMF) had dedicated (6/4) a webpage to COVID-19 related news relevant to the financial services industry. 
  • The centre-right EPP group in the European Parliament had called for an extension to the Brexit transition period, stressing such decision would be the “responsible” thing to do considering complications to the negotiation schedule and the disruption an exit from the EU Single Market in a period of global economic downturn would cause.
  • ESMA updated its EU-wide risk assessment today (2/4) to include the impact of the COVID-19 pandemic on financial markets, highlighting the expectation of a rise in operational, credit, contagion, and consumer risks. Macroeconomic forecasts indicate a global recession for 2020 notably affecting Europe.
  • The French Ministry of Finance, along with the French Banking Federation (FBF) and the Public Investment Bank (BPIFrance) released a detailed FAQ on state guaranteed loans, giving answers on the eligibility of companies for the support package.  
  • The Basel Committee (BCBS) and IOSCO announced the deferral of final implementation phases of the margin requirements for noncentrally cleared derivatives, the BCBS also issued technical guidance on measures to deal with the impact of Covid-19.
  • The German Ministry of Economy  announced (03/04) it will fund up to €4,000 of consulting costs for SMEs and freelancers affected by the pandemic to enable them to have access to professional advisory services. This support will be valid until the end of 2020.  
  • Germany announced (1/4) that €2 billion will be allocated to start-ups and innovative SMEs for which classic credit instruments are often not suitable. Venture capital investors will receive additional public funds in the short term, as part of a public-private co-investment framework. 
  • The US Federal Reserve announced the creation of a $100 billion credit facility to provide liquidity to the Asset-Backed Securities (ABS) markets (TALF 2.0). While specific details have not yet been released, it is widely expected that the terms and requirements of obtaining credit through TALF 2.0 will largely follow those from a predecessor facility that was made available during the financial crisis (TALF 1.0).

Engaging with the treasury community

We are running our survey which will take you no more than 10 minutes to complete and will provide the ACT with valuable insights which will be shared with policymakers as well as the broader treasury community. This survey will close on 13 April and we plan to share details the following week. Details can be found here.

We welcome conversations with our members either on:

  • How you’re dealing with the crisis
  • What you’d like us to raise with the various bodies we are in regular contact with
  • How the ACT can support you during this challenging time.

Send an email to technical@treasurers.org and either James Winterton, Naresh Aggarwal or Sarah Boyce will be in touch with you.

If you have found any resources which you feel we should include, please email us with details.

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