A year of consolidation
In 2009 three of the banks taking part in the survey, Commerzbank, WellsFargo and BNP Paribas, began the process of merging their cash management operations, products and networks with those of banks they had taken over. The merger of Commerzbank and Dresdner, two of the biggest German banks, began at the end of 2008. The networks and product ranges of the two banks, including payments, cash and treasury management, international business and foreign trade financing, have been combined and the integration of technology platforms will be completed by early 2011.
Commerzbank’s objective is to become the natural choice for German companies carrying out international business by providing ‘local people to do local business’ and offering the same levels of service around the world as in Germany. Arne Borkowski, managing director and regional head, international cash management and international business, claims, “Our unique international structure for delivering cash management and international business solutions perfectly addresses our customers’ needs: think in worldwide processes, show local presence and flexibility. In short: be a worldwide partner with local reliability.”
The merger of WellsFargo and Wachovia, which began in January 2009, brought together two US banks with relatively little overlap in international cash management products and networks, the strong financial institution focus of Wachovia complementing the greater emphasis on corporate cash management, FX and trade in WellsFargo. The bulk of the systems and product development will occur in 2010, followed by customer migrations in 2011. WellsFargo’s main objectives are to ensure that all its existing US corporate clients, large and small, see enhancements to their cash management services, and to ensure that the combined bank continues to provide seamless access to international cash management services through the extended network of its own branches and partner banks. WellsFargo’s head of global product management, Judd Holroyde, says, “WellsFargo’s approach to global banking will be unique in the marketplace. Our service offering to correspondent banks will be unmatched, and our technology-based cash management solutions will enable US companies to do business abroad as easily as at home.”
The merger of BNP Paribas and Fortis Bank began in November 2009. BNP Paribas’s objective is to become the leading cash management bank in Europe by combining the two banks’ country coverage and the best of their cash management products. BNP Paribas now has an extensive network of 110 corporate business centres in 20 countries, including large domestic networks in four countries, Belgium, France, Italy and Luxembourg, in Western Europe, and in three, Poland, Turkey and Ukraine, in Eastern Europe. The cash management product range will include the cash pooling services from BNP Paribas and notional pooling and the SEPA Direct Debit platform from Fortis. Based on experience from its merger with BNL in 2006, BNP Paribas has focused on integrating the electronic banking platforms first and is now migrating local accounts to the bank in each country best suited to carry out domestic cash management and payments. Pierre Fersztand, global head of cash management at BNP Paribas, believes, “Cash management is one of the highest priorities in the bank. With this new organization and unrivalled mix of European coverage and local presence, BNP Paribas now has the leading cash management offer.”
Two stronger international cash management competitors in their domestic markets and possibly the strongest and largest pan-European cash management provider could well be the outcome of these mergers depending, as always in cash management, on delivery.
2010 ICM survey
The Euromoney 2010 survey of international cash management (ICM) services covers the services provided by the global network banks, leading cash management banks and the banking clubs, covering all five regions of the world, Asia-Pacific, Europe, Latin America, Middle East and Africa, and North America.
More than 60 banks completed questionnaires on their cash management systems and services and the coverage of their networks of own full service and partner bank branches. The data from their responses is given in the tables. Many banks also submitted additional material and details on their services, and some were interviewed. The tabular results are described in the following sections, including a review of the global network banks and a description of the banks’ cash management services on offer in all five regions.
Global network banks
ICM services in Europe
ICM services in North America
ICM services in Latin America
ICM services in Asia-Pacific
ICM services in the Middle East and Africa
The banking clubs
Consolidation and rationalization
There has been a major effort by the cash management banks worldwide to consolidate their product ranges and rationalize their delivery channels.
Citi has consolidated all its EB and cash and treasury management services on to a single platform, Citi Direct BE, while for an increasing number of banks consolidation is basically white labelling other banks’ products and services. For Deutsche Bank, with more than 25 banks now white labelling its payment and cash management services, this is becoming big business.
Few corporate clients can manage their international cash management requirements with the services provided by a single bank. Companies can either manage the combination of banks they use independently or choose a bank that can satisfy their requirements with its own and its partner banks’ branch networks. The ICM banks have very different balances of their own full service branches and partner banks’ branches around the world in the solutions they offer. Bank of America Merrill Lynch and J.P. Morgan have more countries serviced by their partner banks’ branches than by their own, others have more countries with their own full service branches. Citi and HSBC have the lowest proportion of countries serviced by partner banks, as shown in Figure 1.
| Figure 1 – Relative importance of partner banks |
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| Source: Cash management banks. Copyright© 2010 J&W Associates |
The coverage of the cash management banks’ ICM networks changes from year to year, the balance of own versus partner bank branch countries offering an insight into the bank’s cash management strategy. Changes in the country coverage of the global banks’ networks over the past 12 months are given in Figure 2.
| Figure 2 – Changing balance of global network banks country coverage |
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| Source: Cash management banks. Copyright© 2010 J&W Associates |
Two of the banks in the survey have expanded their country coverage by increasing the number of both own branch and partner bank countries. Bank of America Merrill Lynch has added one own branch country and two partner bank countries. Deutsche Bank, which for many years has had the smallest combined own branch and partner bank country coverage of the global network banks, expanded its own branch country coverage in 2009; Marilyn Spearing, global head of trade finance and cash management corporates, transaction banking, Deutsche Bank, explains, “In the past 12 months, Deutsche Bank has delivered on its commitment of geographical expansion across all regions of the globe. Examples include new branches in Ukraine, Abu Dhabi and China.” Deutsche Bank also added two new partner bank countries. The expansion of the ICM networks of both of these banks clearly indicates their commitment to the cash management business, as Standard Chartered Bank’s addition of 15 new partner bank countries in Asia-Pacific indicates its to the ICM business in that region. Other global network banks have also rationalized their ICM networks, with Citi losing two own branch countries and adding five partner bank countries, HSBC losing 13 partner bank countries in Asia-Pacific and RBS losing three own branch and seven partner bank countries.
Notable changes in the ICM network coverage of the regional cash management banks include Commerzbank, as a result of its merger with Dresdner Bank, adding two own branch and four partner bank countries in the eurozone, BBVA adding four partner bank countries in the eurozone, Banco Itaú adding two own branch countries in Latin America, and ICBC adding 25 partner bank countries in Asia-Pacific.
