How did you get into treasury?
There was no FTSE back in 1970 – it didn’t come along for another 14 years – so I started in international financial control in what was then called an FT30 company. There were treasury issues all over the business and I had to get stuck in.
I sat on the main treasury committee almost immediately (it was chaired by the group executive vice-chairman and the finance director), although I didn’t formally move into treasury for several years.
Tell us about a couple of career highlights.
The year after I started, I proposed and then created a treasury centre in Lausanne – outside UK exchange controls – based in a European marketing office that was in the process of being closed. This was an important step in stabilising – for the whole of the following decade – what was then the UK’s largest private-sector employer and exporter. We had leased dedicated telephone lines between London and Lausanne, plus military-grade fax machines (which were then the best!) and permanently live-linked mini-computers – i.e. wardrobe-sized boxes – in each office’s dealing room.
Another highlight was Cadbury Schweppes from 1986, where I integrated tax, treasury and corporate finance – including M&A, long-term planning, all group-level project review and, eventually, insurance and property too – into group treasury.
Your involvement with The Association of Corporate Treasurers (ACT) goes back to its very beginnings in 1979. What do you see as its most significant achievements from its earliest days – and during the time you were policy & technical director?
First of all, early on, it was about establishing corporate treasury as a distinct function and discipline in its own right. Then, the ACT got a professional-level education off the ground, in the shape of the qualification scheme for ACT membership (MCT), so that we could train our successors. Indeed, it’s worth noting that such a path was not, at that point, available anywhere else. The qualification is now called the Advanced Diploma in Treasury Management, which is the qualification for what we now know as Fellowship (FCT).
Second was the ACT’s successful effort to secure many amendments to the bill that became the Financial Services Act 1986. Crucially, those amendments enabled non-financial corporates to continue to operate once the Act was in effect. In its preparatory stages, the bill had been drafted ignoring (or in ignorance of) the use of financial instruments by non-financials. Left unamended, the bill would have had the effect of prohibiting such use.
The ACT has also encouraged the UK authorities to consult it (on behalf of treasurers) on matters affecting the conduct of corporate treasury in firms of all sizes. Keeping that activity alive is a continuing and vital part of the ACT’s work and something I prioritised when policy & technical director. This is important too for smaller firms – remember that the organisation has always had a pro-bono policy – and that out of the four million-odd UK firms, only 6,000 or so are not SMEs.
In addition, the ACT served as a point of contact – plus a source of information and inputs – for the UK authorities in the period before and during the financial crisis. It was also, of course, on hand at that time as a source of advice for non-financial corporates.
Much of the advice that the ACT provided to corporates in the two years up to the crisis was eventually encapsulated in a special briefing called Contingency Planning for a Downturn in the Economy: a treasurer’s checklist. (The UK authorities advised against including the word ‘crisis’ in the title, or publishing it before the crisis itself had peaked.)
When you look at the resources that treasurers have now, which ones strike you as the most useful – or the most significant advances?
What do you see as the biggest issue facing treasurers today?
Technology, of course.
Then, preventing other functions from turning treasury into a ‘techie’, back-office area that isn’t heavily involved in the group’s business strategy, planning and policy has always been pretty high on the list – along with ensuring that the ACT keeps the authorities aware of corporate treasury while making national policy, so that the treasurer’s role in a firm is still useful.
There is also the matter of what I call ‘resizing disruption’.
Today, we often see predictions of a turbulent few years ahead. But it’s important for the profession to think those outlooks through widely and in some depth, in terms of the effects the predicted trends will have on the underlying businesses of the firms we are working in, and financial markets as a whole.
For that, you need to have consulted many colleagues. And you don’t have to make it all up. Just look back for a moment: the 1970s saw swinging exchange and interest rates and share prices as whole economies roiled.
For example, between spring 1972 and year-end 1974, the London stock market fell by 73%. In 1975, inflation saw the UK retail price index hit a peak of 26.9% for the year to June 1975. The Bank of England overnight interest rate peaked at 17% at the end of the decade. In 1976, the Italian lira and the British pound fell in nominal or trade-weighted terms by 40% or more.
Contingency plans (of the type I mentioned and linked to above) must be well thought through. Even if the contingency that arises is different from all those you considered, you will nonetheless have done most of the thinking for the situation you actually find yourself in. The odd percentage price of movement here or there is not a crisis.