intercompany netting

Mexico - Corporate Treasury Update

Read more about Mexico - Corporate Treasury Update

Report date:

12 Jan 2024

Commentary

In many ways, Mexico is a paradox. It has a vital, and complicated, relationship with its northern neighbour: apart from anything else, migration across its land border into the USA is a significant, and highly contentious, topic in US domestic politics.

But the reality is that Mexico has a thriving economy, and has modernised its financial and banking infrastructure to the point where the consensus on the call was that it is a country where it is relatively easy to work, and where most modern treasury management techniques can be used. There are no exchange controls, cash can be freely transferred across the national borders, and cross border cash pooling is regularly practiced. FX hedging can be done freely both onshore and offshore, and the country is well banked, with both good local banks and most international banks being well represented.

Despite this overall positive environment, we still had a lively call. There are a series of challenges, and some points were not always totally clear. None is particularly serious, but they still take up management time and attention:

Citibank operate through a relationship with Banamex. While this works well, several participants reported service level issues, and there were challenges with data not being transmitted through the IT systems. This resulted in manual interventions which should not have been required.
Consistent with their global strategy, Citi/Banamex are withdrawing from the retail banking sector. For some participants, this caused a problem, as banks in Mexico share the Latin American practice of giving employees a better deal on their retail banking services if the company pays payroll through them.
Otherwise, some participants reported issues setting up and managing local

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Topics covered in this report:

Bank Accounts, Bank Relationships, Cash Pooling - cross border, intercompany netting, payroll, POBO/ROBO

Service providers discussed in this report:

Banamex, JP Morgan, HSBC, Bank Mendes Gans, BAML, BBVA, Citi

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Treasury & FX in Bangladesh, Pakistan & Sri Lanka

Read more about Treasury & FX in Bangladesh, Pakistan & Sri Lanka

Report date:

20 Jan 2023

Commentary

Pakistan, Bangladesh, Sri Lanka – three countries with sizeable populations and even bigger economic and social problems. They are difficult places to do business at the best of times – but they have become even more problematic with recent world events, limiting tourism receipts in Sri Lanka and restricting the apparel export business in Bangladesh.

The themes across the three countries were remarkably consistent, though there are variations in the detail:

For all our participants, these are important markets, so they are staying there, even though it is very difficult to get currency out. However, one participant is in the process of divesting their entity in Pakistan.
FX has always been an issue in these countries, but it has got worse recently. However, the prospect of an IMF package has led to some improvement in Sri Lanka.
Officially, none of the countries has strict exchange control regulations, but in practice, they are restricting the outflows of hard currency by a series of administrative measures. Goods imports tend to be prioritised over services, royalties and dividends.
In Pakistan, central bank approval is required for all

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Topics covered in this report:

Hedging FX, Cash Repatriation, Dividends, Royalties, Funding, Intercompany invoices, Letters of Credit (LC), Bank Relationships, Investing, Imports, intercompany netting

Service providers discussed in this report:

HSBC, Standard Chartered, Deutsche Bank, Citi, Sampath Bank, Habib Bank, Commercial Bank (Sri Lanka)

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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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