When you talk about collateral, treasurers often bridle, worrying that they will be required to meet systematic margin calls. This discussion recently moved to OTC (over-the-counter) derivatives, which we know will need to involve margin calls in the future, unless exemption is given to non-financial companies (which seems to be the case). This collateral market today represents a few hundred billion euros under management.
However, this market has a number of imperfections and a degree of inefficiency that are giving rise to operational problems. There are also market restrictions which prevent the banks, certainly, from making the best use of collateral. The idea we start from is, however, simple: why not use the assets that you hold to finance yourself or, in less favourable economic circumstances, accept them in order to bolster your own position?
François MasquelierHead of Corporate Finance and Treasury, RTL Group, and Honorary Chairman of the European Association of Corporate Treasurers