Generating Value through Treasury Technology at CLP
By Francis Ho, Senior Director - Group Treasury & Project Finance Department, CLP Holdings Limited
CLP is committed to implementing best-in-class processes, controls and decision-making across its business, so is its treasury department. As the group continued on its growth trajectory, treasury needed a more robust, scalable treasury management solution to meet its current and future needs, particularly given the fast-changing market and regulatory environment. In this article, Francis Ho, Senior Director - Group Treasury & Project Finance of CLP Holdings, describes the process of selecting and implementing a solution in treasury, the outcomes that treasury has achieved so far, and future plans.
We have a centralised treasury organisation with a broad remit, including cash management, cross-border and intercompany financing, project finance, risk management, treasury control and compliance. As at 31 December 2016, our treasury team handled a derivatives portfolio with a notional value of around $11.2bn USD equivalent. Around $6.7bn of approximately $9.8bn USD equivalent in credit facilities was a drawdown amount. In addition, we managed around $600m USD equivalent in surplus bank balances, cash and other liquid funds.
With our rapid growth in recent years and business plans for the future, we have recognised the need for a more integrated treasury management system to meet our day-to-day needs and future requirements, particularly for reporting and control. Also in view of regulatory developments such as derivative reform, new rules on hedge accounting, and Basel III, we decided to be proactive in procuring a new treasury management system.
While CLP operates in Asia Pacific, we are keen to embrace global best practices in treasury wherever possible. We needed a broad range of functionality to cover the full spectrum of our treasury activities, including debt, liquidity, foreign exchange (FX), interest rates and counterparty risk, supported by extensive reporting and workflow controls, to facilitate our early adoption of a new Hong Kong Financial Reporting Standard on financial instruments (HKFRS 9). We were also looking for flexibility and scalability to manage our business considering the evolving regulations and ongoing market volatility. It was important for us to simplify implementation, adopt best practices, and save maintenance effort with a cloud-based SaaS (software as a service) solution. Software provider Reval was selected as it met our business requirements.