Fitch report shows Basel 3 capital requirements will reduce banks’ return on equity by 20 percent.

Big banks stashing buffer bucks to satisfy Basel 3 rules will see their return on equity diminished. That’s the conclusion of a Fitch report that said 29 of the world’s largest banks – global systemically important financial institutions or G-SIFIs – might need to raise about $566 billion in common equity in order to meet Basel 3 capital requirements. This would translate into about 20 percent cut on their returns.

A look at what’s on International Treasurer’s radar screen.

Several topics came out of International Treasurer’s weekly editorial meeting, including what goes into a mature enterprise risk management (ERM) program, creating an external cash manager scorecard and an update on what's happening on the corporate tax reform front.

LATMPG members settle on agenda topics for upcoming June meeting.

Argentina, tightening FX controls and how to manage the associated FX risk therein are top of mind for members of The NeuGroup’s LatAm Treasury Managers’ Peer Group as they gear up for their spring 2012 meeting.

Members of The NeuGroup’s T30-2 measure counterparty risk in a number ways.

A least a few companies’ major bank counterparty made big news recently with a more than $2bn trading loss. But while that bank’s, (OK, JPMorgan’s), trading losses are big, they’re likely not enough to put it out of business – it reportedly has a $360bn derivative trading portfolio that has earned billions over the years. So the ISDAs et al likely haven’t changed all that much. Still… anything can happen, so it’s always prudent to check on all the methods used to check on what risks the company’s counterparties present.

Managing excess liquidity in Asia can be a challenge but companies and banks are starting to rise to the occasion.

Finding ways to improve investment of excess liquidity as well as access to excess liquidity is always challenges in Asia. This is mainly because growth and opportunities are outpacing the facilities to support them. This was the topic of one session at The NeuGroup’s recent Asia Treasurers’ Peer Group in April. One of the key issues is that as balances in Asia accumulate, more members see their firms recognizing the need to do something.

By Geralyn Frances

Canadian company FINCAD helps companies reduce the burdens and risks created by hedge accounting.

Since Enron, companies have dealt with stricter valuation rules for derivatives, including hedge effectiveness and the accounting treatment of financial transactions. Accountability for derivative instruments certainly is not new, but rule modifications and changing standards require practitioners to pay more attention. For the treasury groups still inundated with spreadsheets or otherwise manually calculating hedge relationships, there is a smarter and easier solution.

By Geri Westphal

New regulatory frameworks are giving supply chain finance a higher profile.

Large global multinational companies continue to review and improve their strategies for managing working capital and seek new ways to more efficiently manage the flow of funds through the entire supply chain.

By Anne Friberg and Mary Ann Dowling

Members of The NeuGroup’s FX Managers’ Peer Groups tinker with counterparty assessment models to find a proper role for CDS spreads in the analysis.

During the financial crisis, companies sought alternatives to credit ratings to assess the counterparty risk of their banks. The idea was that agency ratings aren’t forward-looking enough and don’t give the whole picture of the financial health of any given institution. After all, Lehman Brothers had an A rating before imploding; meanwhile its CDS spreads were through the roof. Since then, CDS spreads have emerged as a metric used in various models for risk assessment, and increasingly monitored and incorporated as early-warning signals to supplement old-fashioned credit ratings. The question is, how can companies make the most appropriate use of this metric?

By Joseph Neu

Treasurers should remind themselves frequently that their treasuries have a principal duty to support their firm’s business units—all the way down to the local level. It is too easy to get caught up in the benefits of centralization and forget that some of the most important support treasury can provide is on the ground.

By Dwight Cass

Pricing and risk management activities require ever-more market data, forcing corporates to address the same big data challenges financial institutions face.

What type of business increased its spending on financial market data the most last year? The question brings to mind the endless rows of computers stuffed into northern New Jersey technology centers that execute algorithmic equity and derivatives trades for banks and hedge funds. But neither prop traders nor buy-side quants boosted their data spending as much as treasury and FX.