International cash management meets the global challenge
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International cash management meets the global challenge

Euromoney’s latest annual survey of international cash management services shows that banks are responding to their customers’ demands for a more comprehensive and flexible range of services. The evidence points to the decline of the specialist and the rise of the global provider. Jack and Wolfi Large investigate

by Jack and Wolfi Large

Supplement: Technology in Treasury Management Guide

International cash management (ICM) will always be a tricky business, coping as it must with many different cultures, legal, tax, banking and payment systems, as well as companies’ head offices and subsidiaries. Yet it continues to expand to cover more areas, driven by companies’ demands for more efficient anfd complete business services. Partly in response to those demands, but also to add value to their services, banks are increasing their coverage, functionality and support.


 There is growing acceptance in banks of the importance of ICM, as senior bankers come to appreciate how critical these services are to their clients. “Cash management is a vital service for companies and a cornerstone in the relationship between banks and their corporate clients,” says Bruno Lavole, BNP Paribas’ new head of ICM and a senior corporate banker for many years. “To stand out from the pack, banks must at the same time deliver a long-term commitment, as contracts are typically three to five years and require high-quality, reliable 24/7 365-day service.”


 This article continues the annual ICM reviews formerly published in Corporate Finance magazine, which began in the 1990s, the last of which appeared in November 2004. It covers the general trends in ICM and the services 10 leading banks around the world offer, plus their missions in the ICM business, before describing the coverage and services of the six global network banks, the banking clubs and the leading cash management banks in the Asia-Pacific, European and Latin American regions in January 2006.


General trends

Companies have always wanted ICM solutions customized to meet the needs of their individual structures, market environments and future plans. Now, both individually and collectively, they are becoming more insistent that they want open standards for cash management formats and interface protocols, wherever possible, and also much tighter integration of the whole working capital cycle and financial supply chain.

Interestingly, banks are reporting that corporate ICM requirements are now basically the same worldwide, the only differences being in how their solutions can be implemented. Since our last survey the main developments in corporate requirements for ICM services have been:

  •  continued and growing demand for centralized cash management solutions in general, with specific demands for full global solutions or at a least global oversight with regional autonomy (previously very few companies were looking for global ICM solutions), as well as regional solutions or regional oversight with local autonomy, though growth in this area is considerably slower;

  • growing demand for greater efficiency and more control to comply with increasing regulatory requirements, including the US’ Patriot Act and Sarbanes-Oxley legislation and international accounting standards;

  •  the corporate treasury departments of many large companies have now automated most of their activities and, although they are still tidying up their procedures and business flows to improve straight through processing (STP) levels, they are increasingly focusing on areas that impact on the productivity of their business as a whole, rather than just cash and treasury management;

  •  large companies assume that leading ICM banks will have the necessary infrastructure, connectivity and payment system memberships to meet most of their requirements and are increasingly looking to the banks to be trusted advisers and business partners;

  •  many medium-sized companies have the same cash management objectives and strategies as larger companies, but are often less able to implement the latest solutions and technologies because of lack of funding and economies of scale;

  •  acceptance of partner banks and banking clubs in ICM solutions seems to be growing, with general acceptance from most medium-sized companies and even some of the larger companies overcoming their reluctance to use partner banks;

  •  the rapidly increasing range of ICM options and standards seems to be causing some confusion in corporate treasury departments.


The main developments in banks’ ICM services and delivery have been:

  •  the merging of cash and trade services to provide integrated ICM services, for example, Barclays’ cash and trade solutions department;

  •  a steady move to open standard-based, non-bespoke services, such as the Swift Member Administered Closed User Groups;

  •  all the banks have continued to fill the gaps in their ICM product functionality and coverage. For example, Standard Chartered Bank over the past 18 months has developed host-host partnerships with banks in China and acquired local banks in Indonesia and South Korea, and single-currency multi-country cash pooling is now being offered by most of the major banks;

 partner banking continues to evolve with:

  •  banks developing host-host links with key partner banks to improve consistency and quality of service, such as the JP Morgan-ING link, and Standard Chartered Bank’s links with key partners in Asia-Pacific;

  •  Citigroup is using partners where essential local links are needed to provide a complete ICM solution, such as in forming partnerships with post office networks in the Asia-Pacific region;

  •  a general expansion of partner banking in most areas of the world except the Euro-zone, where partner banking will inevitably decline when the Single European Payments Area becomes fully operational. Several major ICM banks already have exit plans. As one senior banker put it: “I only use partner banks by necessity today. In the longer run, in the SEPA region partner banking is dead” (for further information on developments in SEPA see the Payment Systems.

  •  all the major ICM banks are focusing on achieving significant  economies of scale to ensure they remain competitive and profitable as the income from payments and most standard ICM services continues to decline, leading to joint ventures, such as the Fin-Force third-party processor of cross-border payments, in which the shareholders are KBC Bank, Rabobank, Transaktioninstitut/DZ Bank and EDS, as well as major banks seriously promoting the white labelling of their ICM services by smaller banks;

  •  for successful banks the cash management business is growing significantly, for example:

  •  Standard Chartered Bank experienced 118% growth in electronically initiated cash management transactions over the past year;

  •   JP Morgan’s cash management business in Europe has grown dramatically over the past three years. Steve Donovan, senior vice president, says: “We view Europe as a strategic area for growing our business. Corporates are increasingly looking for integrated solutions and our business model complements their needs”;

  •  Citigroup’s Global Transaction Services Division, which has 45,000 corporate and fixed income cash management clients in over 100 countries and more than 240,000 users for its CitiDirect EB service, processed over 1 billion cash management transactions in 2005 and revenues grew by over $500 million in the past three years.

  •  As the successful ICM banks continue to invest in people, systems, infrastructure and products the smaller and less proactive ICM banks are likely to fall behind and may eventually have to get out of the business.

Mission statements

Banks have been adding to the range and depth of their ICM services for many years. Recent examples include JP Morgan adding trade logistics and the payment of government benefits to its services. Almost all the banks now have some form of cross-border sweeping and concentration services, such as the Automated Common Concentration International Service from BNP Paribas, and the 50-plus global cash management services and 200-plus applications within Citigroup’s new TreasuryVision portal and EB delivery service.


To check the progress of this expansion in ICM services Euromoney asked 10 leading cash management banks to list the services they now include in their ICM offerings and state their missions in the business, (see figure 1).

The list of services the banks included not only reflects the areas they are focusing on, but also shows how dramatically the range of ICM services has expanded over the past decade. Almost all the banks now include trade services in their ICM offerings. Similarly, commercial cards are often an integrated part of the cash management range. The other major expansion of the ICM business has been into the optimization of supply chain management and all aspects of working capital.

Another feature is the emphasis on electronic delivery. ABN Amro is focusing on the electronic delivery of ICM services as part of an enterprise-wide initiative. In 2005 it set up a transaction banking business unit to provide cash, trade and card services to all clients, both retail and corporate, worldwide. The core services are adapted to meet the particular needs of each of the bank’s markets and client groups. Within this wider remit it is continuing to focus on working capital management and financial supply chain efficiencies.

 Ann Cairns, ABN Amro’s CEO transaction banking, explains: “Our ‘one bank’ approach allows us to share best practice and encourage innovation as well as delivering the scale efficiencies the market needs, for the benefit of all our clients. We are convinced this is the right model for the future.” Electronic delivery and technology is also reflected in the ICM mission statement from Deutsche Bank to be the “premier provider and technology leader in ICM services”. Citigroup’s mission to “add value by increasing transparency, visibility and control” reflects the drive behind its massive investment in TreasuryVision (for further details see the Technology Review. The focus of the other banks’ mission statements ranges from helping clients to expand their businesses domestically and internationally to being one of the top three ICM players, but all show the importance of ICM services within the banks.


Global network banks

Euromoney’s annual survey of the six global network banks branch1 networks and partner banks2, and access to payment clearings was extended this year to include the number of countries in which the banks issue payment cards locally.

The survey data, given in Figure 2, shows there has been an increase of over 50% in the number of countries where the banks have full service partner banks. Part of this increase may well be due to the greater willingness of the global network banks to report their partner bank arrangements but it also seems to represent a significant increase in their use of partner banks. For the first time we have Citigroup reporting 16 partner banks in Asia-Pacific and HSBC five partner banks in Europe.


 Other features of the position in January 2006 were:

  •  only three of the banks, ABN Amro, Citigroup and HSBC, have their own branches in all regions;

  •  Citigroup has by far the widest global coverage, with full service branches in 98 countries, compared to 55 for HSBC, the nearest competitor;

  •  even adding in partner banks none of the others covers as many countries as Citigroup - ABN Amro comes closest with 76;

  •  ABN Amro has the largest number of partner bank countries (32);

  • direct access to local payment systems is also dominated by Citigroup, with more direct access to all types of local payment clearings than any of the others;

  •  HSBC, with its partner banks, issues payment cards locally in far more countries than the other banks; Citigroup and JP Morgan have the highest coverage in Western and Eastern Europe, in Latin America Citigroup leads, and in the Middle East/Africa and Asia-Pacific HSBC dominates. (See figure 2).

Citigroup is still clearly the global leader in ICM coverage and payment system membership, but the competition is intense. Growing acceptance of partner banking and its increasing sophistication may give other global network banks the opportunity to overcome the advantages Citigroup’s greater coverage provides.

Banking clubs

Banking clubs bring together wholesale cross-border services with the local retail banking systems and services of their member banks to provide ICM and local cash management solutions. They have pioneered the setting up and management of ICM partnerships with detailed service level agreements and agreed practices covering how member banks work together. The only real differences between the banking clubs are their documentation and working practices, and the commitment of member banks.

The current coverage of the banking clubs is given in Figure 3. All the clubs have increased their country coverage since November 2004, with IBOS now covering 21 countries and Connector and UniCash more than 30.

A major development in the banking clubs has been the recruitment of three of the global network banks: Bank of America joined Connector, HSBC France and JP Morgan are members of IBOS. This was partly due to bank mergers but interestingly none of them has decided to withdraw. Instead, they have begun to exploit the opportunities for fully integrated ICM solutions that banking clubs offer. The number of member bank branches is significant, ranging from some 18,000 to more than 48,000. (See figure 3).

All the banking clubs are reporting a noteworthy increase in business from medium-sized companies and also the beginnings of business from global multinational corporations.


Connector now has 13 member banks in 34 countries. Over the past 14 months there has been a steady flow of referrals and new business between the members. In the US it has replaced Fleet Bank with Wells Fargo, and its coverage has increased as member banks have expanded their operations - for example, Sampo into Latvia, RZB into Albania and Belarus, and Fortis into Turkey.

 The UniCash Alliance now has 34 member banks in 32 countries. Since our last survey Bank of America has joined the network and coverage has improved significantly in Germany. In 2005 the number of UniCash customers increased by some 25%.

IBOS has expanded its network with the addition of Slovenia. Its main focus of development has been on improving the processes and documentation for IBOS member banks working together, and on meeting the demands of the US Patriot Act and Sarbanes-Oxley legislation, which require additional documentation and fully documented processes and controls.

To meet these new demands IBOS has introduced new processes and documentation to remove all minor difficulties in setting up and managing fully compliant integrated ICM solutions between member banks. It ensures as smooth, rapid and predictable a business flow as possible in all areas: for example, in account opening procedures and in the implementation of multi-country liquidity management solutions.

The banking clubs have not benefited as much as they might from their pioneering standardized ICM procedures and agreements because, quite often, banks have used these techniques in bilateral agreements rather than joining a banking club. But the ever-improving disciplines for integrated multi-bank ICM solutions the banking clubs are developing may well prove to be better than most provided by bilateral agreements between banks.


Our survey of the ICM services available in the Asia-Pacific region covered seven banks: ABN Amro, Bank of America, Citigroup, Deutsche Bank, HSBC, JP Morgan and Standard Chartered.

(See figure 4.1and figure 4.2).


The survey results given in Figure 4 show:

  •  very different regional ICM strategies, ranging from ABN Amro’s broad objective of helping its clients expand business to JP Morgan’s internally focused aim of serving clients so that it is clearly competitively differentiated;

  •  HSBC has the widest regional coverage with its own branches in 20 countries, followed by Citigroup with branches in 17 countries and the rest with branches in 12–14 countries;

  •  Standard Chartered Bank has by far the largest number of its own branches in the region, more than 600;

  •  ABN Amro has partner banks in the highest number of countries (25) but relatively few partner bank branches, unlike Citigroup whose 17 partner banks in the region provide a massive 170,000-plus branches, mostly in China; Bank of America, HSBC and JP Morgan have few partner bank relationships in the region;

  •  the difficulty of providing fully integrated ICM services in the Asia-Pacific region is shown by how few countries are covered by pooling and sweeping arrangements;

  •  HSBC dominates in payment cards, issuing cards in 20 countries;

  •  ICM services are typically only available to relationship clients with only three of the banks willing to accept ICM-only clients;

  •  customer service offerings are relatively similar, apart from opening hours where JP Morgan is the only bank to offer 24-hour, five-day-a-week coverage.


Our survey of ICM services available in Europe covered 15 banks: ABN Amro, Bank of America, BNP Paribas, Citigroup, Danske Bank, Deutsche Bank, Fortis Bank, HSBC, ING Bank, JP Morgan, KBC Bank, Royal Bank of Scotland, RZB, SEB and Société Générale. (See figure 5).

 The survey results given in Figure 5 show:

  •  a wide variety of ICM strategies in the region, ranging from aiming to support clients’ global treasury needs to specific focus on areas within Europe;

  •  almost all the banks provide full coverage of the Euro-zone countries through a combination of their own branches and partner banks; only four, ABN Amro, BNP Paribas, Citigroup and ING, have their own branches in 10 or more countries;

  •  in Central and Eastern Europe, RZB and KBC have the highest number of countries with their own branches, 15 and 11 respectively, and BNP Paribas has the highest combined total of its own and partner banks with 18 countries;

  •  mass disbursement services are now available in 25-plus countries, mass collection services now cover up to 21 countries;

  •  KBC Bank can now cover up to 16 countries with notional pooling services and ABN Amro up to 31 countries with sweeping services;

  •  most of the banks do not automatically expect their ICM services to be used by companies to which they have extended credit and the majority of the banks are willing to accept ICM-only clients;

  •  extensive customer service support is available and opening hours have been extended since 2004, but again only JP Morgan offers 24-hour service support.

Latin America

Our survey of ICM services available in Latin America covered six banks: ABN Amro, Bank of America, BBVA, Citigroup, Grupo Santander and HSBC. (See figure 6.1and figure 6.2). The survey results given in Figure 6 show:

  •  a wide range of regional ICM strategies, with ABN Amro again aiming to help clients to expand their business, Citigroup focusing on regional and global companies’ shared service centres, and HSBC announcing its intention of expanding beyond its current three core countries;

  •  there is far less integration of the banks’ systems in the region than in Europe;

  •  country coverage is dominated by Citigroup, with its own branches in 22 countries (and no partner banks), followed by ABN Amro and Grupo Santander with eight countries; Bank of America even with its partner banks still only covers 19 countries;

  •  BBVA and Grupo Santander have a significant number of in-country branches with a total of 2,500-plus and 3,800-plus branches respectively, much higher than the other banks in the region;

  •  Citigroup dominates in mass disbursement and collection services, covering 22 countries;

  •  Bank of America dominates in the issuing of payment cards locally with almost double the coverage of any other bank;

  •  notional pooling is available in only a few countries but sweeping is available in many more;

  •  most of the banks offer facilities to manage country risk with offshore US dollar accounts;

  •  all the banks expect corporate clients to which they extend credit to use their ICM services;

  •  a limited range of intra-day and automated short-term asset management services is available;

  •  customer service support is available in normal office hours with only BBVA offering 24-hour support.

The future

In the future, believes Chris Furness, global head of cash management at Standard Chartered Bank: “The winners in the cash management business will be those banks that can provide holistic fully integrated solutions covering payments, collections, liquidity, trade, FX and supply chains. The age of the specialist service provider is over.”


Other suppliers in the ICM business argue about whether or not this is so, but one thing they agree on is that the range and depth of the ICM business continues to increase. Over the next 12 months we will see how the different players fare in this new era: for some it will be good, for others it will become either uneconomic or difficult to succeed, or both.


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