The possibility of Scotland becoming an independent nation following the referendum in September should not faze treasurers.
A panel session on the topic of ‘risk as an opportunity’ at the ACT Annual Conference in Glasgow on 14 May found that treasurers were sanguine about the currency risks posed by Scottish independence.
“Our only concern is, will our assets and liabilities move in some way?” said Pedro Madeira, assistant treasurer at Heathrow Airport. “If not, we don’t really care.”
James Kelly, head of treasury at pest controller Rentokil Initial, was equally sanguine. “Maybe 4% of our business is in Scotland,” he said. “We’d find a local bank, make sure we can still collect direct debits and pay suppliers.”
But Christian Nelson, of Crédit Agricole CIB, said it was certain that lawyers would make a lot of money out of Scottish independence. “Every swap contract would need to be rewritten,” he said.
The panel agreed that it was important to take both a macro and a micro view when it came to managing risk, although Kelly noted: “Treasury can’t make big macro decisions alone. There is a strong basis for macro hedging, but it has to be embedded in the organisation. Decisions have to be taken at CEO or CFO level.”
Nelson added that treasurers were becoming more adventurous about using new hedging tools. “On the FX side, we’re seeing people use instruments that they historically hadn’t used,” he said.
Sally Percy is editor of The Treasurer