Investments

Treasury FX & Banking in Nigeria

Read more about Treasury FX & Banking in Nigeria

Report date:

12 Jun 2023

Commentary

If a country ever deserved the term “Complex Country”, it has to be Nigeria. The country itself has a complex composition: it is made up of many varied ethnic groups who have a long history of strife between each other, including a very bloody civil war in the twentieth century. It has immense mineral wealth, especially oil, and some very crowded cities, which are often home to massive traffic jams. Despite the oil riches, the country has huge economic issues and a long history of exchange controls and significant devaluations – the naira has gone from parity with the US dollar in the 1970s to between 450 and 600 to the dollar today – depending on whether you use the official or the black market rate.

This brings us to one of the key challenges facing international companies operating in the country. The many regulations are applied in ways which are not always transparent, and there are many local players who show astounding creativity in finding ways round them. So the MNC’s dilemma: how do I make sure these solutions are truly legal before I use them?

In short, welcome to Africa.

Whatever the regulatory situation, Nigeria has a population of 80 million people, oil wealth, and a large diaspora. So it is an important market that is difficult to ignore. Participants all face the same issues:

Difficulty accessing foreign currency
Assessing various proposals, including brokers, private FX sales, buying offshore bonds
Trapped cash, and how to invest it
Which banks to deal with? Local banks are needed for collections in remote areas, and they usually

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Topics covered in this report:

Hedging FX, Cash - deposits, Cash Repatriation, Trapped cash, Investments

Service providers discussed in this report:

Citi, Crown Agents Bank, Standard Chartered, Stanbic Asset Management, United Capital, Zenith Bank, Guaranty Trust

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Treasury & Banking in Brazil

Read more about Treasury & Banking in Brazil

Report date:

10 Mar 2023

Commentary

Brazil never disappoints: the term “complex country” applies to it in nearly every respect.

Apart from the usual updates to the constantly changing environment, the purpose of this call was to see whether there is any improvement in the economic situation (inflation has recently been even higher than usual), and whether there is any visible impact from the recent political turmoil and change of government.

The bottom line is that it is very much business as usual. The Brazilian economy continues to perform well, even if inflation persists and interest rates remain high. However, inflation and interest rates do seem to be levelling off, and the BRL has been relatively stable recently. The country remains a main engine of growth for the LATAM region, and most participants have significant operations there – though everyone finds it to be a tough and highly competitive market.

Brazil is continuing its efforts to simplify its complex tax laws and currency regulations: most people are managing to do cross border intercompany loans, both in and out, and the taxes are being reduced or eliminated. In the meantime, of course, there are still some significant taxes on some types of transactions, and daily operations remain burdensome and complex.

The country is also making big strides in electronic payments: boletos are widely used, and come participants are beginning to use PIX, at least for receipts. Electronic boletos are increasingly supported by even the international banks.

Banking in Brazil is very competitive: many participants use Citi, with varying levels of satisfaction, while JPMorgan are viewed as being aggressive and increasingly

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Topics covered in this report:

Hedging FX, FX, Funding, Investments, Collections - domestic, Tax, payroll, Offshore accounts

Service providers discussed in this report:

JP Morgan, Citi, Banco de Brasil, Itau, Bradesco

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Treasury & FX in India

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Report date:

20 Feb 2023

Commentary

This Treasury Peer Call took place a few days after the announcement that India had officially overtaken China as the most populous country in the world. Given the increasing speculation that India might also replace China as the world’s fastest growing major economy, it seemed opportune to get a view on how things are developing.

All participants are bullish about their businesses in the country. Several already have significant operations, and most see major opportunities. The good news is that several participants are generating meaningful profits and cash – the bad news is that this creates issues in terms of cash investment and repatriation. And, of course, India is India – there are always plenty of regulations to navigate.

Main points and concerns:

For those companies who are generating cash, it is a challenge to invest it. Most retain a conservative approach, which means safe investments – these typically return a rate which is below inflation.
Cash repatriation is not without issues. The main vehicle is dividends: these attract withholding tax (the rate varies according to the jurisdictions), and are subject to complex tax rules. Cross border pooling is not allowed, and intercompany loans are subject to central bank approval.
Within India, cash pooling is

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Topics covered in this report:

Investments, Hedging FX, Cash Pooling - domestic, Supply Chain Finance, Intercompany loans, HR, Payments-digital, Funding, Cash Repatriation

Service providers discussed in this report:

Barclays, JP Morgan, BAML, Citi, Standard Chartered, HSBC, Deutsche Bank, BNP Paribas, MUFG, ICICI, HDFC, Kotak Mahindra Bank

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Treasury & FX in Thailand

Read more about Treasury & FX in Thailand

Report date:

27 Sep 2022

Commentary

Thailand is a large and relatively prosperous country, with an area close to that of France and a population of nearly 70 million. It has a long tradition of fierce independence – it is the only country in the region which was never colonised. Today, the country participates actively in the global and regional economy – it is a member of ASEAN, but it retains a distinctive approach.

The result is a country which is modern and business friendly, but which continues to present some challenges. Generally, our participants find that it works: they are able to do cross-border funding into, and out of, Thailand, and include it in various cash pools. But there are remnants of FX controls – recently relaxed – and it can be challenging to know exactly what the rules are.

Main highlights:

It is easy to convert Thai bhat (THB) into foreign currency, usually the USD. Traditionally, there have been documentation requirements, but many participants find these are being relaxed.
During the Asian crisis of 1997 to 1998, Thailand forbade the remittance of THB out of the country. This is now allowed, but apparently for the settlement of THB denominated invoices: the consensus was that it.......continues

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