Category

Banking

BankingCapital MarketsTalking Shop
February 9, 2021

Talking Shop: How to Set Rates on Intercompany Lending Agreements

Member question: “We are in the process of reevaluating our intercompany (IC) loan rate-setting policy. I’m trying to benchmark to understand how this is managed at other companies. What is your company’s approach to setting rates on any intercompany lending agreements? “I know reference rates are in flux with the Libor transition but I am specifically trying to understand, from a transfer pricing standpoint, if you set rates with a standard mark-up or based on the entity’s creditworthiness similar to a…
Justin Jones
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BankingFXRegional
February 4, 2021

Cash Pools in Asia for Corporates Trying to Access Funds in China

NeuGroup members describe cash pools designed to overcome obstacles and minimize taxes.Several members of NeuGroup’s Life Sciences Treasury Peer Group have set up cash pools in China relatively recently, a topic they discussed at their fall meeting in 2020 and in follow-up email exchanges with NeuGroup Insights. The pools are generally a means to an end: getting access to the funds in a country where that can be difficult and expensive. Two-way sweep. One member is using what she described…
Justin Jones
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BankingESG
February 2, 2021

Carbon Credits 101: Introduction to Voluntary Emissions Reduction

BNP Paribas shares a guide for corporates looking into carbon emission markets.A NeuGroup member at a large technology company recently asked peers on an online forum, “Does anyone have experience in purchasing carbon credits in voluntary markets?” For guidance, NeuGroup Insights reached out to BNP Paribas, which has a long-standing presence in this area and is committed to developing origination capabilities in carbon offset markets.The bank shared a presentation to help clients better understand the dynamics of the voluntary emission…
Justin Jones
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BankingFXRisk Management
February 2, 2021

Under the Hood: How Banks Price FX Swaps With Corporates

Wells Fargo explains credit and capital charges for corporate counterparties on derivative transactions.Corporates that are using or considering using long-dated hedges such as five-year FX forwards or swaps can benefit from understanding the way banks price derivatives using a combination of credit and capital charges. That idea surfaced during a recent meeting sponsored by Wells Fargo for NeuGroup members who manage foreign exchange risk. Credit and capital costs can impact unwinds and restructurings as well as new transactions, Wells Fargo…
Justin Jones
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BankingRegional
January 28, 2021

Unpleasant Surprise Post-Brexit: A New Bank Fee for SEPA Payments

NeuGroup members confront a fee for payments from UK to EU accounts that lands on beneficiaries.Treasurers are still learning the full impact of the UK’s recent Brexit deal, and several who attended a recent NeuGroup European Treasury meeting shared their reaction to a banking fee that took some of them by surprise. Some corporates making SEPA (single euro payments area) payments from accounts in the UK to the EU are now experiencing an additional fee for receipt, as some banks…
Justin Jones
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BankingLibor SOFR
January 28, 2021

Cutting the Cord: When Banks Plan to Stop Making Libor Loans

A NeuGroup survey shows SOFR is the replacement rate for most banks, and many accounting systems aren’t yet ready.The opportunity to give feedback on a plan announced in December to allow legacy USD Libor contracts to stretch to June 30, 2023—18 months beyond the initial deadline—ended Monday. Almost everyone expects Libor’s administrator to make it official and is planning accordingly. At a recent meeting of the Bank Treasurers’ Peer Group, NeuGroup members reviewed the results of a survey on their…
Justin Jones
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BankingCapital MarketsTreasury Management
January 21, 2021

Tear Down, Rebuild: A Treasurer Lays a Foundation for Best Practices

How a newly hired treasurer revamped her company’s capital structure, banking group and her team. Soon after arriving at a fast-growing midsized multinational company, a newly-hired treasurer with extensive experience in loan restructurings and amendments launched a loan compliance cleanup. That was the first step on the path to establishing best practices at a company that had never had a treasurer with experience in treasury. The treasurer described what she did and her thinking at a recent meeting of NeuGroup’s Treasurers’…
Justin Jones
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BankingCapital Markets
January 21, 2021

Borrowing Authority and the Board: How Often Do You Renew?

NeuGroup’s survey results on the frequency of borrowing authority renewals, use of carve-outs for M&A and more.Nearly two-thirds of the treasurers responding to a recent NeuGroup survey renew their borrowing authority with the board on an ad hoc or as-needed basis, while about one-third do it every year. That’s shown in the pie chart on the left, below. But at a follow-up meeting to discuss the results, the general consensus seemed to be that an annual review made the most…
Justin Jones
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BankingCapital MarketsCOVID-19
January 14, 2021

Calmer Seas: Revolvers Recover, Return to Pre-Covid Pricing, Tenor

Upfront fees are higher, but treasurers renewing facilities see reason for optimism; U.S. Bank is also positive.Multiyear tenors for revolving credit facilities are now available to investment-grade (IG) corporate borrowers, according to several NeuGroup members who have been talking to their bankers recently. This week, one treasurer said, “Things have normalized a fair amount for solid credits,” citing a large bank. This member, who was in the process of renewing his company’s revolver last year when Covid hit, is now…
Justin Jones
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BankingTalking Shop
January 7, 2021

Talking Shop: Allowing Vendors to Directly Debit Bank Accounts

Member question: “What are your policies with respect to allowing vendors to direct debit your bank accounts for invoices due? “Our policy does not support vendor direct debit of our bank accounts. We do have an exception process for situations where vendor stoppage may have material impact (i.e. utilities for a manufacturing plant) or the vendor requires DD and there are no other alternatives (i.e. postal service).“I think part of our position is a historical perception that it is ‘bad’…
Justin Jones
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