Coronavirus: What corporate treasurers need from their banks
Euromoney, is part of the Delinian Group, Delinian Limited, 4 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2024
Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Coronavirus: What corporate treasurers need from their banks

Corporate treasurers are doing everything they can to keep businesses running as smoothly as possible during these challenging times. How do their relationships with bank partners hold up in times of stress?


On March 11, when the World Health Organization (WHO) classified Covid-19 a pandemic, dozens of countries closed their borders and banned all non-essential international travel. According to the UN agency, the fallout of the coronavirus could cut 50 million jobs worldwide in the tourism and travel industry. Asia will be the worst affected. 

“Just when we thought we had seen the worst, the coronavirus pandemic hit,” says Debasis Nandy, president and group CFO at Thomas Cook India. “Seventy percent of our business comes from India, but if people cannot travel, we will need to make major adjustments to our business. This will be our new normal for some time.” 

The sudden halt to the movement of people in and out of India will have big ramifications on a country that has been slowly emerging from an economic crisis that was fuelled by falling consumption rates and a faltering manufacturing sector.

“We will have to assess all working capital solutions to see where we can ease some of the pressure in the face of this temporary but severe challenge,” says Nandy.

Prove to us that you will support us during the tough times and you can rely on our business in the good times - Indrajit Pathak, Hindalco

Before the crisis, a priority for Nandy and his team was to work closely with banks on vendor financing options. Today, the focus is squarely on cash conservation. 

“This will be the case for the next few months,” he says. 

Local Indian banks, however, may not be able to provide the support that companies such as Thomas Cook India need (the travel company is an independent travel company that bought the India, Sri Lankan and Mauritian brand from the now defunct Thomas Cook UK in November 2019). 

Following the global financial crisis, Indian banks went on something of a spending spree, issuing loans to companies despite the fact that the economy was stalling. Today, the country is the second largest holder of non-performing loans globally behind China, with $159 billion-worth on banks’ books.


Debasis Nandy,
Thomas Cook India

And while the World Bank recorded that the NPL ratio in India fell from 10% in 2017 to 9.5% in 2018 as a result of tighter monetary policy by the Reserve Bank of India, the beginning of a new, downwards trend may only continue if Indian banks maintain their risk-averse strategy, says Nandy, transforming them from bullish lenders to bearish savers and making access to finance and liquidity locally tough. 

“The pandemic could make things worse for us,” he says. 

In 2010, Thomas Cook India consolidated its banking relationships, looking to local Indian banks for transaction banking support. Five years later, the company’s strategy changed when it started making overseas acquisitions, beginning in Hong Kong and quickly moving to other countries in southeast Asia, the Middle East, Australia, the US and Africa. 

Since then, Thomas Cook India has built relationships with international banks that have a presence in India – turning to global banks to match its global ambitions.

Managing cash over multiple governmental jurisdictions – three of which are in India itself – is a big challenge for any business. In India, strict foreign-exchange regulations add another hurdle to cash pooling and accessing dollar liquidity.

“Within the current context, we rely on a mixture of international and local banks for support,” says Nandy. “But we wonder whether, in the medium term, international transaction banks will be our main port of call, given the continued restrictions on the local banking sector within the current economic climate. 

“In any case, we are glad to have a variety of banks that we hope will support us – regardless of what challenges are thrown at us.”

Bank partners

With low liquidity and higher capital constraints after the financial crisis in 2008, corporate treasurers were inclined to stay with long-term bank partners – and many were reassured that this was the right choice, given the good reputations of the largest transaction banks.

Recently, however, the transaction banking world has shifted. As the economy has stabilized and technology advanced, new transaction banking partners and options have come to the fore and treasurers have been tempted by all the choice on offer.

New banking apps tailored for treasurers have become part of banks’ normal product offerings.

Treasury management systems (TMS) are increasingly using application programming interface (API) technology, allowing third-party software to access data, which can help streamline payments, invoicing, cash pooling and more – all in real time. Even distributed-ledger technology (DLT), despite its stop-start progress in the mainstream, is finally gaining ground in trade and trade finance. 

As the price of technology falls, some smaller, regional banks have been able to offer corporates a wide suite of transaction-banking solutions, creating more competition in the space. And where banks haven’t come up with solutions themselves, financial technology firms have stepped in to offer niche cash-management and trade-finance tools to treasurers. 

Now more than ever, data management, standardization and how we can create more efficiency through technology drives treasury business and dictates the types of banking partners we chose to work with - Janko Hahn, Autoneum

When one brewing company opened up shop in Europe, its newly appointed treasurer was tasked with setting up its treasury business from scratch.

“The company was looking for acquisitions while we were setting up our finance and treasury departments,” says the treasurer. “We had to move fast, and implementing up-to-date tech solutions to automate the business as much as we could was the only way to get the business up and running. 

“There was nothing in place and only six of us in the treasury team at the time,” he says. “We had to move really quickly.” 

The treasurer and his team use Citi’s cash-pooling service, which sweeps all business funds centrally and helps with weekly forecasting, and Swift gpi for cash settlements. But the company also uses IT2, from technology company ION for cash-flow transparency in real time. 

This software is connected to Bloomberg TRM, as well as business software company SAP for risk management and a number of other treasury solutions. The main purpose behind the tech plug-ins was to create interoperability between systems, streamlining treasury management – something that many treasury operations wouldn’t have been able to do even five years ago. 

“Regardless of what banks say, they are still concerned about losing business to fintechs, especially in the SME [small and medium-sized enterprise] space,” says Martin Smith, head of markets analysis at East & Partners, a business banking market research company. 

“But from what our market research tells us, fintechs are still reluctant to compete with the banks directly, instead looking to partner with them when and where they can.” 


Marcus Hughes,
Bottomline Technologies

Marcus Hughes, director of business development at Bottomline Technologies, says: “Many SMEs channel payments through non-bank institutions these days because often it is easier and cheaper to do. We have seen corporates switch to payment fintechs and are happy with what they get, but this is often much less attractive among multinational corporates, where needs are much more complicated and extensive.”


Even in this dynamic environment, long-lasting relationships between banks and large corporates are still incredibly valuable because, while fintechs offer fresh solutions, not all treasurers are willing to be guinea pigs for the first wave of technological innovation. 

For Janko Hahn, head of treasury operations at Autoneum, a global automotive supplier headquartered in Switzerland, working with fintechs requires extra caution. 

“There are some interesting treasury solutions, which we have kept our eye on, such as corporate-to-corporate lending, smart contracts and more, but for now we will maintain a wait and see approach,” he says. 

“This is because we still have some concerns over security and reliability – key to our successful operation. We know our banking partners well and we are confident that they can provide us with the technological assistance we need – but that’s not to say things won’t change in the future.”


Janko Hahn, head of treasury operations at Autoneum

Banks realize that to stay relevant, they need to offer tailored tech solutions to meet corporate client needs. 

“A couple of years ago, as we were looking to gain much more transparency within our business, we decided to focus on SAP ERP – a standardized software offering – to do just that,” says Hahn. 

“JPMorgan came to us with a new API that they thought would allow us to plug our data into this software as well, providing the transparency we needed. It has been such a valuable tool for us, given that initially our data was stored in a simple Excel sheet.” 

JPMorgan was on Autoneum’s radar because of an existing corporate banking relationship and the company began working with the bank more intensively when SAP was rolled out into the US and Canada several years ago.

“We had a close relationship from then on, so when they came to us with a specific solution for our specific needs, we stood up and took note,” says Hahn. 

Since adopting the API, Autoneum has been able to follow company cash flow in real time. Any guess work that the company relied on in the past has been put behind it and the business has become much more efficient.

“I think now more than ever, data management, standardization and how we can create more efficiency through technology drives treasury business and dictates the types of banking partners we chose to work with,” says Hahn. 


Working-capital management, cash-flow forecasting, currency pooling, foreign-exchange risk management are all themes that affect corporate treasurers. 

In a time of crisis, though, the focus can shift to assessing counterparty risk, payments processing, business-continuity plans and cybersecurity. 

You can’t be everything to everyone. This is why we work with clients that we believe we can service the best - Fernando Iraola, Bank of America

But there is no one-size-fits-all technology that can support these processes. The implementation of any new technology to help streamline business will be largely dependent on business type, size, geography and regulation. Those lumbered with legacy systems will find upgrading difficult. 

“Automation will free up time for those of us working in treasury and eventually eliminate human error, and this is something we are actively looking to adopt,” says Nandy. “But for now, much of our end-of-day recording is still done manually because our systems lack interoperability. 

“Standardization is still lacking, and we still find that competition means that banks do not want to share valuable information between them. In fact, from what we can see among banks in India, this lack of standardization is actually an excuse for banks who are really worried about losing out to their competitors.”

Tailoring solutions

Corporate treasury needs are often changing faster than technology and regulation, therefore banks with a niche may be the most valuable to corporate clients.

“You can’t be everything to everyone,” says Fernando Iraola, global co-head of global transaction services corporate banking at Bank of America. “This is why we work with clients that we believe we can service the best, tailoring our solutions to their specific needs, especially when regulatory and geographical differences can create obstacles for corporates.

“This is just one example: Mexico is a relatively open market compared to Brazil, which continues to be heavily regulated, although the government has expressed that it will start to liberalize the currency eventually. Meanwhile they are all digitizing and at different times: Mexico has implemented a fintech law, while Brazil is exploring open banking, instant payments and foreign exchange liberalization.” 


Fernando Iraola, global co-head of global transaction services corporate banking at Bank of America

In order to remain valuable to their corporate clients, banks need to understand all of these nuances and put forward the tools that will work within these various environments.

“Any innovation or technology we bring to market is based off the voice of the client research,” says Iraola. “It serves a practical need and has a level of interoperability. There must be a value add to the client.”

In some cases, banks have gone above and beyond their core remit to support their corporate clients. 

“There was an energy company looking to open up a production hub somewhere in Europe and we engaged with them because we thought Rotterdam would be a good option for them,” says Tim de Knegt, treasurer and manager, strategic finance at the Port of Rotterdam. 

“It was a sound business with expected revenues of tens of billions over the next 25 years, and we believed having the plant in the Netherlands would have been a boon to the economy and would have kick started the biochemical industry here. The process the plant used, however, emitted CO² and the government believed that the opposition could use this as ammunition to criticize their environmental and business policy.” 

Eventually, Rotterdam lost the bid and the plant is due to be built at another European port. 

“The annoying thing is that the CO² emissions will affect the Netherlands in any case, because the plant is so close to us,” says de Knegt. “Moreover, the level of CO² emissions would have been lower given the business proposition we offered in Rotterdam.” 

De Knegt feels that Rotterdam lost the project because local regulation was uncoordinated. Nevertheless, the port’s bank partners supported de Knegt and his team in their plans, even meeting with government officials to try and sway their decision. 

“In the end, it didn’t work out in our favour, but we appreciate the extra mile our banking partners went for us,” says de Knegt. “We reward banks that go the extra mile for us with our loyalty.”

Going global

Cheaper, better technology means that companies of all shapes and sizes are going global as barriers to international trade continue to fall and the opportunities to gain new customers and fresh markets become easier to take. 

E-commerce, instant cross-border payments and online remittance services targeted at the consumer have seeped into the corporate world and transformed transaction banking. 

And as business becomes more global, banks have responded. European transaction banks are searching out new opportunities in Asia, not only following their corporate clients into the region but picking up new ones as local companies look to diversify banking partners. 

In Europe, British companies are looking to new partners to help them maintain business channels in a post-Brexit world, while some large investment banks are moving towards transaction banking for its stable revenue sources. 

Meanwhile, Asian transaction banks are supporting a growing number of local corporates looking to expand in regional markets and globally.

According to East & Partners, 20% of corporates surveyed in 2012 stated that international capabilities and network were a reason to change bank. A similar survey in 2019 showed that this number had grown to 45%. 

“We work with JPMorgan, UniCredit – which has really supported us in terms of European cash pooling systems and the number of banks we need to engage with across the region,” says Hahn at Autoneum. “We also have relationships with UBS and Credit Suisse for a number of other functions, in some of the more challenging jurisdictions we work in, such as Argentina and India. We engage HSBC for their local, regional and global capabilities, and Commerzbank has proven its strength as an international bank in China for us. 

“Whether or not the bank and its services will be available in three, five or even 10 years’ time is a question we ask ourselves whenever we enter a new banking relationship,” he says. 

One in three corporates said that they were likely to change their transaction banking partner within the next six months. At the height of the global financial crisis, this was 6% - Martin Smith, East & Partners

While many banks boast about their increased global capabilities and expansion into new markets and products, history has shown that they can withdraw from markets just as quickly as they enter. 

HSBC sold its corporate and wholesale banking operations as part the sale of its Brazilian business to Bradesco in 2016. Earlier this year, rumours surfaced that the bank may sell its business in Turkey. 

In 2013, UBS exited India, although the Swiss bank still has a number of technology hubs in the country.

These are just a few of the examples that Hahn at Autoneum mentions. Given the low and negative interest rate environment, and the job cuts that banks in Europe have made over the last year, treasurers remain wary of how their transaction banking relationships will continue. 

Deutsche Bank, UniCredit, Societe Generale, BNP Paribas and HSBC, among others, have all announced job cuts in the last 12 months, mostly in Europe.

“Treasurers are by nature risk averse,” says Hahn. “We are always planning for the worst-case scenario, so we will engage different banking partners depending on our geographical and technical needs as long as it makes business sense.” 

Corporates are also looking for better value for money from their transaction banking partners. This includes specialized information about their sector, solutions tailor-made for their business and up-to-date insights into developments in cash management and trade finance. 


Martin Smith,
East & Partners

“Our research shows that treasurers do not necessarily care about macroeconomic insights, core competencies or even cost, but whether or not their companies are ahead of or behind their direct competitors,” says Smith at East & Partners. 

“One in three corporates said that they were likely to change their transaction banking partner within the next six months. At the height of the global financial crisis, this was 6%.” 

And although corporates are also looking for better value for money from their transaction banking partners, it is not necessarily the most important issue. 

“We have hundreds of billions worth of goods moving through our port each year, a couple of thousand saved on transaction banking fees isn’t going to make a difference,” says de Knegt. “Our banking partnerships still boil down to the value-add services they can provide.”


Having many bank relationships is much more commonplace today than ever before. Aluminium and copper manufacturing company, Hindalco, a subsidiary of the Aditya Birla Group in India, is starkly aware of the benefits multi-banking provides in uncertain times. 

The firm is affected by India’s economic malaise just as Thomas Cook India is, but it has also been grappling with falling demand in India for its products as cheap scrap aluminium floods the market. 

Scrap aluminium – which isn’t subject to the same taxes and tariffs as primary aluminium in India – is worth around 85% of national demand. With restrictions on scrap metal imports to China, the excess usually lands on Indian shores. 

While aluminium producers lobby the Indian government to increase taxes on imports – and lower trade volumes from China due to the pandemic might offer some respite – companies such as Hindalco are relying on business abroad. Acquisitions in North America have been a lifeline for the company.

In 2007, Hindalco acquired US-based aluminium company Novelis for $6.2 billion. To finance the deal, Hindalco arranged a loan facility from ABN Amro, Bank of America and UBS. 

In July 2018, Hindalco announced plans to acquire US aluminium processor Aleris. In February last year, the company raised $2.3 billion in short-term loans to finance the deal from 20 banks including Goldman Sachs, Barclays and Standard Chartered. 

Hinadlco’s acquisition of Novelis, just before the global financial crisis, proved a difficult time for the company. 

“Our debt-to-ebitda ratio went up by around 10%,” says Indrajit Pathak, deputy treasurer at Hindalco. “To bring this back down, we needed to streamline the business, look at which products we needed the most and manage our cash flow closely, which lead to us looking into more technological solutions to manage our transaction banking needs. 

“The banks that supported us with the original deal where the ones we turned to for help with our working-capital solutions.” 

As with Hahn at Autoneum, what started off as an investment banking relationship transitioned into transaction banking. And like any corporate treasurer, Pathak needed expert transaction bankers that not only understood the economic and financial climate but also the intricacies of the aluminium industry globally. At this point, the company’s international banks seemed like a lifeline for Hindalco, so it chose to partner with them.

“Prove to us that you will support us during the tough times and you can rely on our business in the good times,” says Pathak.

Ability to adapt

The fallout from the coronavirus is already having a huge impact on the global economy. For corporate treasurers it is the latest in a long list of crises. 

“In the last five years, treasurers have had Brexit, the trade war between China and the US, two commodity price crashes and the climate crisis to deal with,” says Hughes at Bottomline Technologies. 

“This is another period of uncertainty – one that has engulfed the entire world – but treasurers will find solutions to work through these problems like they have in the past. In fact, the coronavirus will only serve to expedite these trends further.”

Following the US-China trade war, American trade shifted towards Mexico and Canada away from China and Asia. Intra-European trade accounts for 70% of total European trade, while in Asia the equivalent figure is 60%. The creation of the African Free Trade Agreement will likely decrease that continent’s overreliance on imports from Europe and Asia. 

Corporates have already been adjusting to the new, regional normal for some time and have adjusted operations, working-capital management systems and supply chains accordingly, which will also help them manage the fallout of the coronavirus crisis. 

“Geopolitical trends, such as trade wars, will have a long-term impact on our business,” says de Knegt. “We have spent some time putting systems in place to mitigate interruptions to supply chains. For instance, we have sufficient liquidity sources to sustain our business if no contracts are fulfilled for the next few months. We have done this through a mixture of working-capital arrangement and support from the banks.”

This ability to adapt combined with risk mitigation has worked in the past. At the height of the global financial crisis, the Port of Rotterdam saw trade volumes fall by 10%, but this only dented revenues by 5%. 

“We could be in the middle of a global meltdown, but our cash flow – and thus our treasury operations – usually stays stable,” he says.

Of course, each company will feel the impact of the more recent economic crisis in very different ways. The auto industry, for example, has more or less come to a complete halt while China – the largest automotive manufacturing country in the world – is in lockdown. 

“Things are changing on a day-to-day basis, so it is difficult for us to predict how banks and regulators will adjust under the circumstances,” says Hahn. 

“For us, it is essential to maintain a strong and balanced financing structure at the corporate level, in combination with other solutions to provide liquidity to units in these challenging times,” he says. “Staying in touch with our bank partners has never been more important, so we hope that they maintain open channels of communication with us.”

But as the crisis deepens, access to liquidity will become even more difficult just when instant access to liquidity will be essential to maintain a sense of normality at corporate treasuries. 

“International banks’ networks and the speed in which we can make decisions will be a lifeline for corporates struggling to access liquidity at the moment,” says Ole Matthiessen, head of cash management at Deutsche Bank.

“Our corporate clients trust us to find liquidity for them in the most trying times, and we can do this because we have a strong capital position.” 

Maintaining this position and relaying this message to corporate clients will be essential to maintaining their trust. Corporate treasurers are the unsung heroes during a crisis, adapting as quickly as events develop. 

How banks support them today will define the relationships between them in years to come. 

Gift this article