Key takeaways from the Treasurers’ Group of Thirty 2020 H2 meeting, sponsored by Standard Chartered.
By Joseph Neu
Move up the treasury learning curve. This group has a disproportionate number of treasurers who are new to their role. Several come from the tax side and a few were brought in to build or expand their company’s treasury capabilities.
- All are moving quickly up the learning curve and helping their bosses appreciate the importance of strategic treasury capabilities. Covid-19 has helped make their case—in terms of both coping with crisis concerns for adequate liquidity and the post-crisis mandates to support new business pivots.
- The treasury learning curve may be steep, but this is an opportune time to move up it and help others within your organization better understand what treasury can do. It’s also a way to attract internal talent to the treasury team.
Remote talent management favors the young and the bold. Challenges to onboarding new hires remotely have more members focused on filling open positions internally and training people for advancement. Younger people are generally more open to branching out and being trained remotely.
- The younger generation is also more receptive to the automation and data analytics skills and tools that have become even more of a priority recently. Having said this, more experienced employees can adapt to changing roles in a remote work setting, if they are bold about change.
- One member who started her new role not long before Covid hit noted that she has learned to adapt to a new CFO whom she has never met in person, as the CFO joined the company post-Covid.
- According to the treasurer, “It has worked out surprisingly well and we’ve aligned to get so much done that I would have said it was impossible before,” she said. “Remote work puts the focus on unrelenting execution.
Corporates can do more in response to negative rates. Banks appear to have done a good job of shielding corporates from the impact of negative interest rates by helping them to sweep cash into dollars and access funding at low, if not negative rates.
- There is not a sense of real urgency to change funding or cash investment fundamentally in response to persistent negative rates in the eurozone, Japan, Denmark and Switzerland.
- However, with negative-yielding debt climbing back towards its 2019 record of $17 trillion in the wake of Covid-19 and almost $800 billion in euro corporate debt within 25 basis points of negative territory, perhaps corporate treasurers should become more aggressive in managing their balance sheets with an eye to negative rates.
- On the asset side, Standard Chartered suggests, for example, diversifying further into positive yielding currencies with strong correlations to the reporting currency and low vols to optimize risk-adjusted returns (with or without the aid of FX hedges).
- On the liability side, the bank suggests looking at collateralized EUR loans (using positive rate currency cash) matching more EUR debt to funded EUR assets, or using a floating rate swap to get around loan floors, for example (it may also help with Libor transition).