Migrating the Treasury Function
by Anneli Walltott, Head of Treasury Operations, ASSA ABLOY Financial Services
In 2008, ASSA ABLOY migrated its group treasury department from Geneva to Stockholm, a major undertaking involving an entirely new treasury team. Now that the department has been established in Stockholm for a year, this article looks back at some of the challenges and opportunities that the project presented, and makes some suggestion to other companies embarking on a similar project based on our experiences.
The decision to migrate
ASSA ABLOY operates a centralised treasury organisation, with group treasury managing the cash and treasury requirements on behalf of all group entities. In 1998, group treasury relocated the treasury department from the corporate headquarters in Stockholm, Sweden to Geneva, Switzerland, which remained there for ten years. Fifteen people were employed with dedicated IT support, so the department was largely self-reliant. At the end of 2007, with new management in place, there was a concern that treasury was too remote from strategic decision-making at ASSA ABLOY’s corporate headquarters, so in early 2008 initial plans were put in place to transfer treasury back to Stockholm. This was a huge undertaking as treasury was very well-established in Geneva. Most of the team were either Swiss or Swedish professionals who had settled in Geneva and consequently wanted to remain there.
‘Treasury in a Box’
The new treasury in Stockholm is a completely new team who effectively inherited the cash, debt and investment positions, banking structures and technology in their entirety from Geneva treasury team.
Consequently, the new treasury in Stockholm is a completely new team who effectively inherited the cash, debt and investment positions, banking structures and technology in their entirety from the Geneva treasury team. While this means that no-one has vested interests in legacy processes, it also means that no-one has any history with the company or insights into past decision-making. This has created particular challenges from a technology standpoint.
Although many of the new team had experience with different treasury management systems (TMS) none of us had used the TMS that had been in place at ASSA ABLOY since 2004, SunGard’s AvantGard, nor were we familiar with the interfaces between AvantGard and other internal and external systems. Previously, treasury had managed the system itself, but as part of the migration we decided to move to a hosting arrangement with SunGard, so the system and associated infrastructure is now maintained by SunGard. We had a start-up review of the system with SunGard, and one of their consultants worked closely with us on-site for the first few days. We also received training both on-site and in London, which was specific to ASSA ABLOY’s implementation. While we still have some way to go in becoming fully familiar with the system, particularly as we were not involved in some of the original set-up decisions, we have made progress in optimising both our day-to-day use of the system and management reporting.
All of the treasury professionals who comprise the new treasury have experience in working in treasury in other companies in Sweden, and also experience from the banking side. The individuals within the team bring a broad range of skills and senior-level experience, which has been extremely valuable in developing professional standards, efficient processes and synergies between different parts of the department.
Banking and cash management
As part of the migration to Stockholm, our banking relationships and cash management structures have also been inherited. There was a series of cash pooling projects already under way which we have continued with, but we have not yet reviewed our cash management operations to identify any further improvements. Although we work with a number of banks, SEB is our ‘house’ bank and we consolidate balance information through SEB’s system SEBScreen. We work with SEB in France, Finland, Germany, Norway, Singapore, UK, US and Sweden and we are extending the relationship into Canada.
SEB has been instrumental in enabling the migration to Stockholm and has helped us to gather all the necessary paperwork, including copies of agreements, mandates etc. as authorities on every account needed to be changed. The SEB team has also made the effort to introduce us to senior management for each of the countries in which we bank with them. Our relationship extends to trade finance as well as cash, and SEB has provided us with support in understanding our trade finance portfolio and helped us to find information where necessary.