FX

Commentary

We visit Argentina regularly – at least, in our calls. This is not because we like it – though it is well worth a physical visit. The regular calls are to keep track on the latest, unconventional, attempt to turn the economy round. Will it be successful? At the same time, our peers’ comments showcase perfectly how treasurers and their companies have to react to difficult, and changing, circumstances, and the complex choices they face.

There is no reason for Argentina not to be wealthy – in fact, at the end of the 19th century, it was one of the richest countries in the world. It has abundant natural resources, huge agricultural and fishing potential, and a well educated workforce. Yet, since the 1930s. it has teetered from one economic and political crisis to the next. Every time it seems progress is being made, the economy slides back.

Javier Milei’s latest austerity measures, with the help of significant currency support from his political ally in the US, Donald Trump, appear to be working so far. Peers report that access to foreign currency, while still subject to limitations, is improving, and some of the arrears are being paid down. The famous chainsaw approach to reducing the stifling red tape and bureaucracy has been less drastic than promised, but peers reported some progress. There has been a social cost, and reports indicate that the population is enduring the austerity, but is not prepared to do so indefinitely. 

The options for settling foreign currency:

• For goods imported since December 2024, the process is straightforward. Currency is made available once the goods have cleared customs, though there is still a lot of paperwork.
• For services imported from third parties, the foreign liability has to first be included in a quarterly report to the central bank –  via Communication A 6401 an external assets and liabilities survey. If this is approved, payment can be made in the following quarter, giving effective payment terms of 90 days. If there is any problem or query, payment will be delayed for another month, giving terms of at least 120 days.
• Intercompany services, royalties and dividends have to go through this same process, but approval will usually be delayed, often for long periods.

For intercompany invoices dated before December 2024:

• Buy BOPREALs. These are bonds issued by the Argentine government in pesos, but which will be settled in dollars at a predetermined maturity date. There have.....Please Register / Log In to read the rest of this commentary

   

  CXC reports are based on confidential peer discussions between senior corporate treasurers sharing their solutions to complex treasury challenges.
  Our commentaries, comprising the key findings from the reports are FREE to corporate treasury professionals - simply register here to apply for Basic Membership giving you access to 185+ commentaries and receive new commentaries direct to your inbox.
  Our reports, available via subscription or individual purchase, are packed with practical, experience based learning allowing users to benchmark their operations and identify proven, actionable efficiencies - Read our Testimonials Here

The Balkans is a difficult environment for corporate treasurers. Regulatory complexity, FX controls, multiple languages and scripts and limited presence of international banks mean that work arounds are often required. For example, SEPA (the Single European Payments Area): requires international transfer fees within the area to be aligned with local ones -  Most countries now price cross border transfers as local ones; Greece does the opposite. As a result, internal transfers in Greece are prohibitively expensive.

Our detailed report covers Treasurers’ experiences and approaches to Greece, Bulgaria, Croatia, Slovenia, Romania, Serbia, Kosovo, Bosnia and Herzegovina and  North Macedonia.

Banks discussed in the report include: Citi,Raiffeisen Bank, UniCredit, BNP Paribas, Société Générale, Alpha Bank, National Bank of Greece, Piraeus Bank, Eurobank, Zagrebačka Banka, OTP Bank, Komercijalna Banka Skopje and  BRD Société Générale.

Log In or Register to access our free /contactcommentary (the key findings from the report).

Log in / Register to read the latest CompleXCountries (CXC) commentary on Corporate Treasury & Banking in China has now been published. It adds to a growing archive of corporate treasury knowledge relating to China - Browse 18 commentaries with associated reports here - all sourced from detailed confidential peer discussions between the treasurers of multinational companies with operations in China - the report  includes approaches and experiences with:

• Regulatory environment and regulatory uncertainty
• Engagement with regulators and regional variation
• Cross-border cash pooling frameworks (SAFE and PBOC)
• Cash repatriation methods (dividends, pooling, intercompany loans)
• Trapped cash and liquidity management
• Use and limitations of cross-border and back-to-back loans
• Decisions not to implement pooling and alternative structures (notional pooling)
• Relationships with local Chinese banks versus international banks
• Service quality and challenges with Chinese banks
• Role and performance of international banks
• Domestic cash pooling and cash reporting
• FX management, interest rates, and bank competition
• Onshore (CNY) versus offshore (CNH) renminbi markets
• Short-term investments 
• Funding structures (equity, intercompany loans, onshore bank loans)
• Supplier financing programmes and associated regulatory/KYC issues

International banks discussed in the report include: HSBC, Standard Chartered, JP Morgan, Deutsche Bank, Mizuho, Commerzbank and Citi

Chinese Banks include ICBC &  Bank of China

The full report covers current practices in relation to the list below. To read our commentary (analysis and key findings)  please Log In or Register

• Foreign exchange regulations and practices
• Use and management of Letters of Credit (LCs)
• FX availability 
• Methods of managing foreign currency flows
• Payment terms in the market
• Funding structures and intercompany financing
• Cash management and liquidity
• Exchange-rate exposure and losses
• Corporate legal structures in Egypt
• Local vs. imported manufacturing setups
• Bank relationships and banking landscape
• Geopolitical context and external investments
• Overall business environment and operating conditions

Service providers discussed  in the full report: HSBC, Citi, Standard Chartered