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The 2012 guide to Liquidity Management: Retailer creates new Asia liquidity solution

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By:
Laurence Neville
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A global retailer wanted to take a modular approach to building its liquidity management solution. The company already operated a treasury and shared service centre (SSC) in China and wanted to concentrate all of its Asian liquidity in Hong Kong. An important requirement for the company was that at periodic intervals group liquidity would need to be concentrated back to its home country.

The solution devised by Standard Chartered uses in-country sweeping for local currency and US dollar accounts with all the funds concentrated into a single account for each currency. A regional cash pool in Hong Kong uses a target balance sweeping structure to ensure that all participating accounts have sufficient operating balances. The cash pool header account in Hong Kong is included in an interest optimization solution with in-country header accounts in restricted countries that cannot sweep cross-border. Standard Chartered supports the company’s SSC in China and Hong Kong using its Straight2Bank FX Payments solution which supports 130 currencies. The company’s FX hedging needs are served through a dedicated foreign exchange trading desk located in Hong Kong.

The global retailer has gained a solution that automates the concentration of balances into Hong Kong and offers complete visibility of balances at regional level. It enables yield enhancement for accounts (both US dollars and local currency) where cross border sweeping is not permitted due to regulation. It also offers comprehensive payment and receivable on-behalf-of capabilities to centralize and streamline treasury operations and a one-stop shop for all of the company’s FX needs.

Concentration of balances in Hong Kong
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Source: Standard Chartered