Another audience question was on whether the centralisation process, which in many cases meant removing local banks from the equation, has affected relationships with banking partners.
Treasury’s priority is to keep the company happy rather than the banks, replied Schlageter, although Roche had of course retained its relationship banks during the centralisation process. Its task was also to convince the company’s subsidiaries that the IHB could offer them better services at a lower cost. For some of them this proved a little “out-of-the-box”, as having local banks had afforded these entities a degree of independence.
Despite this, there was a general consensus that centralisation is the right way forward and in an age when the focus on cybersecurity is growing a company can no longer afford to have multiple exit points. Inevitably, this will push some banking partners out of the equation.
Schlageter was then asked how the IHB contributed to the vital task of communicating with the company’s internal and external stakeholders. He said that communication lines were already well-established at Roche’s IHB as the day-to-day bank for 75 of its subsidiaries, “giving it a seat at every table where cash is flowing - and good communication is of course essential”. These communication lines were established in “calmer times” and were simply ramped up during a period of crisis such as now.
The conversation moved to supply chain disruption. Here again, Roche is well prepared as it has run a supply chain financing programme for the past decade and this has been ramped up during the crisis to support the company’s key suppliers and give them access to working capital. As Schlageter commented, the instruments are “sitting in a drawer” so they can be taken out and utilised as and when needed.
Regulations applicable in certain parts of the world impose restrictions on IHBs. While Roche’s subsidiaries in Australia, New Zealand, Hong Kong and Singapore have followed those in Europe in no longer using external banks, countries such as Saudi Arabia impose limitations – for example on the minimum number of services that a subsidiary may receive from an IHB.
Roche assesses each country’s regulation and what is permissible; whether it necessitates using an external bank or everything can be done through the IHB. Schlageter commented that the world is never ideal, but Roche adapts to it as much as possible and uses opportunities to pilot new developments, such as the first CNY cross-border Cash pool via a non-resident in Hong Kong. Discovering how much was permissible and keeping on top of regulation enabled the company to have a sustainable IHB.
Asked by an audience member if either panellist made use of virtual accounts. Infosys has yet to take them up, while Schlageter said that Roche uses them for collections on behalf of (COBO) so that it can internally segregate who is receiving money from whom. Banks able to offer virtual services are much sought after, he added.