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Generating Value through Treasury Technology at CLP As CLP continued to grow treasury needed a more robust, scalable treasury management solution. Here CLP describe the process of selecting and implementing a solution, the outcomes that treasury has achieved so far and plans for the future.

Generating Value through Treasury Technology at CLP

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.

Key Points

  • Recent rapid growth and future planned expansion led CLP to decide to implement a more integrated treasury management system (TMS)
  • While the company operates in Asia Pacific, it was keen to embrace best practices in treasury where possible, and found software provider Reval’s cloud-based SaaS solution best suited to its requirements
  • Implementation took 10 months and the author outlines the many improvements achieved by the single, integrated system
  • Future plans include exploration of the potential to extend use of the system both in Hong Kong and beyond


Project background 

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.
 

Project objectives

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.

 

CLP’s requirements 

  • Visibility - enhance the reporting and visibility of treasury information
  • Consolidation - centralise treasury information to holding company
  • Repeatable processes - standardise and re-engineer our workflow and process
  • Automation – automate our workflows as far as possible to enhance operational efficiency and control
  • Scalability – roll out the system to other regions and business units, and expand the use of system functionality in the future
  • Hedge accounting and compliance – achieve a ‘one-stop’ solution to support mark-to-market, effectiveness testing, disclosure and other regulatory requirements

 

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