Enhancing Pan-European Visibility, Control and Integration
Featuring Davide Raviola, Golder Europe Holdings Inc. and Luciano Cassiago, International Cash Management Sales, Italy, UniCredit S.p.A.
Efficient cash management has been a priority for privately-held specialist engineering firm Golder Associates (‘Golder’) for a number of years, and its European business, managed from Turin, Italy, had an established relationship with a major cash management bank for centralising cash. However, the bank was purchased during the global financial crisis, prompting Golder to select a new pan-European cash management bank and further enhance its European cash and liquidity management infrastructure, as Davide Raviola, European Chief Financial Officer, explains in this article.
Changing banking partners
As we were concerned about the future strategy of our cash management bank under its new ownership, we made the decision to select a new banking partner. We had an existing relationship with UniCredit, and were attracted to working with a bank that had remained stable throughout the crisis, and had a long-term commitment to supporting our business.
We had already achieved a significant degree of centralisation and automation of our cash management activities prior to our relationship with UniCredit. Previously, group companies across Europe had been managing cash and funding locally, resulting in a loss of visibility and control over cash and risk, and preventing surplus balances in some parts of the business being used to fund others. We had therefore implemented a centralised approach to cash management, pooling cash wherever possible and establishing an in-house bank to enable us to align funding needs and reduce costs.
By migrating our cash management business to UniCredit, we aimed to achieve the same benefits that we had realised with our previous bank, but also to simplify our cash management framework. In addition, we wanted to standardise our electronic banking on a single platform with common formats, in order to integrate data more easily with our internal systems.
We appointed UniCredit to pool cash across all Golder Group’s European entities located in Italy, Portugal, Spain, France, UK, Ireland, Germany, Hungary, Sweden, Finland, Norway, Denmark, Turkey and Russia. In the UK, we have opened accounts at UniCredit London Branch and established a local GBP cash pool. In Turkey, we have opened accounts with UniCredit-owned bank Yapi Kredi, UniCredit Bank AG (former HypoVereinsbank) in Germany and UniCredit Bank ZRT in Hungary. In countries where UniCredit does not have a direct presence, we have accounts with its partner banks through IBOS association agreements, such as Santander in Spain and Portugal, and HSBC in France, with a zero-balancing overlay structure with UniCredit.
Daily statements on all our European accounts are provided by UniCredit through its web-based electronic banking system using MT940 messages. These are then converted into the Italian CBI standard so they can be uploaded into our in-house treasury and cash management system. We are also using MT101 messages for transferring cash to/from accounts included in the cash pool.
In most countries, we zero balance cash into our header accounts, with a planned notional pooling in the remainder. In Turkey and Russia, where physical cash pooling is restricted by law, we access balance and transaction information through the electronic banking system. In addition, we are working with UniCredit to consider the feasibility of notional multicurrency pooling on a project base.