Citi

Banking & Cash Management Challenges in South East Asia

Report date: 
10 Jul 2025

Commentary

ASEAN (The Association of South East Asian Nations) has a population of over 600 million. This is more than the EU (450m) or the United States (340m). Its ten member states provide an impressive level of diversity, for history and culture, but also in politics, economic development and prosperity. The broad range of rules and approaches make it a challenge to manage treasury operations. But the population, economic dynamism and key role in global supply chains make it a crucial player in world trade.

The pattern on this call is not a surprise: Singapore is the most advanced and open economy in ASEAN. For most companies, it is part of their international cash pooling and sweeping mechanisms, along with Hong Kong, Australia and, to some extent, China. The Philippines, Indonesia, Malaysia and Thailand are open economies, but they generally require FX to be executed onshore, and cash pooling is usually via intercompany loans: automated sweeping is not allowed. Vietnam remains more difficult. Myanmar, Cambodia and Laos, continue to be highly regulated and short of hard currency. 

Despite their FX restrictions, several countries have incentives for MNCs to set up Regional Treasury Centres (RTCs). These are usually able to transact outside the exchange controls – usually excluding domestic transactions.

Cash pooling: Singapore is the only country in ASEAN where cross-border cash pooling does not present any issues. Regional cash pools are usually based there or in Hong Kong. Most of the other countries allow domestic pooling and sweeping, though experiences vary. They typically do not allow automated cross border pooling, which is instead achieved by making intercompany loans, usually manually, and subject to various approvals. 

Exchange controls: most ASEAN currencies are convertible, at least for goods imports. However, in many cases (again, excluding Singapore), the FX trade has to be executed onshore, with the USD or EUR then transferred outside the country. These trades are usually done from an offshore location. Thai baht can be paid out of Thailand, but the regulation is not ...

 

Please LogIn /Register to access the full commentary and a further 150+ similar commentaries.
If you receive our newsletter - use your email to LogIn / Request Password Reset

 

Topics covered in this report: 
ASEAN, Bank Relationships, Cash Pooling - cross border, Cash Pooling - domestic, Trapped cash, KYC, Cash Repatriation, FX, Regional Treasury Centre, Regulatory relationships
Service providers discussed in this report: 
JP Morgan, DBS, Standard Chartered, Deutsche Bank, Citi, HSBC, Bank Ayudhya (MUFG), MUFG, Mizuho, Bank of America, Bank of PhilippineIslands, Bank Negara Malaysia, Bangkok Bank, Kyriba, Starfish Digital

Please log in, or create a free account, to read the whole report summary.

User Experiences with Virtual Bank Accounts

Report date: 
20 May 2025

Commentary

All your cash in one place – but with each transaction tagged so it can be identified and allocated automatically. This is the promise of virtual bank accounts: the first offering was a unique IBAN for each customer to pay into, although all the cash really goes into the main account. This makes it easier to reconcile the receipts to invoices – the customer is already identified.

The second step is to keep one bank account, but give each subsidiary or division its own IBAN: no need for cash sweeping or pooling – all the cash is in one place. But you can then use the tags on the records to constitute and account for each entity. This structure is used by many in-house banks.

Banks have been marketing virtual accounts for more than a decade. In a recent CXC poll (results here) , 30% of respondees said they use them: of these, 84% found the product met or exceeded expectations, while 16% were disappointed.

So – what is happening? Why hasn’t the product taken the world by storm? 

Overall:

Some peers have effective solutions, which vary from complete in-house banks to receivables and payables solutions with varying degrees of sophistication.

Others have found that they are able to achieve many of the objectives of virtual accounts by using the enhanced data recognition and machine learning capabilities of more recent ERPs. These peers generally found virtual accounts added limited value.

During our call, we learned of unexpected uses of virtual accounts. These included managing payroll confidentiality, enforcing limits on employee credit cards, and segregating customer cash.

Positive cases:

  • One peer achieves significant benefits, not only from cash pooling, but from eliminating the need to do intercompany settlements. Several peers have implemented...
Please LogIn /Register to access the full commentary and a further 150+ similar commentaries. If you receive our newsletter - use your email to LogIn / Request Password Reset

 

Topics covered in this report: 
Virtual accounts, POBO/ROBO, COBO, in-house bank, Cash Pooling - cross border, Cash Pooling - domestic, payroll
Service providers discussed in this report: 
BNP Paribas, Citi, JP Morgan, Wells Fargo, Barclays, HSBC, FIS, Coupa, Blackline, SAP, Deutsche Bank

Please log in, or create a free account, to read the whole report summary.

Bank Relationships & Cash Management in China

Report date: 
7 May 2025

Commentary

China is in the news a lot at the moment. Interestingly, this – well attended - call was very much in line with our usual discussions on the country: not a single mention of trade wars or tariffs. On the other hand, there was a lively discussion about all the usual issues related to pooling cash and managing banking relations – issues which show no sign of going away.

All peers on the call reported that business was strong, with most generating cash. They also repeated a theme familiar to people who know China: contrary to the common perception of a highly rigid and regimented society, there is a lot of confusion as to what the regulations actually are, and there are regular inconsistencies in how they are applied. 

This “summary” is long (the full report is 15 pages of granular detail): a lot of details were discussed, and these are generally appreciated. As always, these are the experiences and views of our peers, (lightly) edited for clarity.

The main topics:

  • Domestic cash pooling: many, but not all, peers practice this. However, they do all come up against limits related to the equity of the pool header. 
  • Cross-border pooling: this is where there is the most uncertainty.
    • There are two main schemes, operating under licences provided by either PBOC (People’s Bank of China) or SAFE (State Administration for Foreign Exchange). These have different quotas, rules and requirements and approval delays. 
    • There has been talk for some time that the two schemes will be merged, but there is little concrete evidence this is happening.
    • It has been suggested that, while existing schemes continue to operate, the approval of new ones has been slowed. Several peers are looking to implement new...
Please LogIn /Register to access the full commentary and a further 150+ similar commentaries. If you receive our newsletter - use your email to LogIn / Request Password Reset
Topics covered in this report: 
Cash Pooling - cross border, Cash Pooling - domestic, Bank Relationships, Bankers Acceptance Drafts, Money Market Funds, Investments
Service providers discussed in this report: 
Bank of America, Bank of China, Agricultural Bank of China, Bank of Ningbo, Citi, JP Morgan, Standard Chartered, HSBC, DBS, China Merchant Bank, ICBC, Union Pay, WeChat Pay, Alipay

Please log in, or create a free account, to read the whole report summary.

Approaches to Investing short-term cash in Corporate Treasury

Report date: 
22 Apr 2025

Commentary

Risk versus reward. 

Treasurers face this eternal trade-off directly when investing short term cash. There is pressure to increase earnings, and a constant search for new solutions, but the priorities remain, in order:

  1. Safety
  2. Liquidity
  3. Yield

Companies put a lot of effort into making money and bringing in cash: the potential downside to losing money outweighs any yield benefit risky investments may bring.

As always, there is a lot of complex detail, depending on the size, the cash balance and the culture of the company.

  • Most companies have a formal investment policy, often approved by the board.
  • One of the benefits of centralising cash is to avoid paying the bid/offer spread of having cash in one place, and debt in another. Several peers used notional pooling (BMG and JPMorgan were mentioned) to achieve this. Both banks offer deposits for the cash in the pool.
  • The most used instruments are bank deposits and MMFs (Money Market Funds). A few peers invest directly in high quality sovereign bonds, as well as repos. The rules can be more flexible in highly regulated countries, such as Turkey and Angola.
  • Some peers used bank deposits as a means of balancing wallet share with relationship banks, but most take advantage of the higher rates provided by MMFs.
  • Others left pools of cash in different countries and regions: in these cases, the short term investments were frequently managed by a team in central treasury.
  • One peer managing Latin America was pleased with the better yield offered by some currencies with higher nominal interest rates, though this was not a common approach. Most of the commonly used instruments are available in...

 

Please LogIn /Register to access the full commentary and a further 150+ similar commentaries. If you receive our newsletter - use your email to LogIn / Request Password Reset
Topics covered in this report: 
Money Market Funds, Investing, Risk - counterparty, Bank Accounts
Service providers discussed in this report: 
Westpac, Bloomberg, JP Morgan, Bank Mendes Gans, spotfire, Blackrock, Cachematrix, FIS, 360T, Santander, Itau, Citi, Bank of America, Deutsche Bank, Credit Suisse, Pictet Asset Management

Please log in, or create a free account, to read the whole report summary.

Corporate Treasury, Banking & FX in India

Report date: 
1 Apr 2025

Commentary

Is India the next China? 

In our recent Expert Perspectives series on India, [view it here], DBS Bank stated they believe it is. 

  • Except for COVID, GDP growth is consistently above 5% [source: World Bank] 
  • The government is making efforts to streamline the bureaucracy which has always been a challenge, and move it online.
  • Manufacturing is being encouraged – India has long been a big provider of services. This requires an investment in infrastructure.
  • Following COVID, there has been a big move towards a cashless society, with an advanced electronic banking system.
  • There is comparatively little movement in FX: exchange controls remain in place. However, most transactions can be executed, including cross border loans and hedging – though cross border cash pooling is still very much forbidden. However, there is still a significant administrative burden.
  • As part of the opening up, India has established a form of free trade zone, Gift City.

So – does this match our peers’ experiences?

  • We will get into the detail below: the full report [14 pages - available to premium subscribers] contains a lot of useful experiences. But, in big picture terms:
  • All peers view India as a major source of growth: some are investing in manufacturing. While no-one is considering scaling back in China, India has generally been earmarked for the next big investment, where it has not already happened.
  • Some peers have entities which are still losing ...

 

Please LogIn /Register to access the full commentary and a further 150+ similar commentaries. If you receive our newsletter - use your email to LogIn / Request Password Reset
Topics covered in this report: 
FX, Hedging FX, Funding, GiftCity, Bank Relationships, Collections - domestic
Service providers discussed in this report: 
DBS, Citi, JP Morgan, BNP Paribas, HSBC, Deutsche Bank, ICICI, HDFC, State Bank of India, Kotak Mahindra Bank, SWIFT, 360T, Bloomberg

Please log in, or create a free account, to read the whole report summary.

Corporate Treasury & FX in Colombia, Chile & Peru

Report date: 
4 Mar 2025

Commentary

Amongst treasurers, Latin America does not have a great reputation. Even if we have come a long way from the past of military dictatorships and very difficult regulations, it remains more complicated than many other regions. Peru, Colombia and Chile all have seen significant turmoil in the recent past.

So – where do we stand today? It says a lot that, on this call, the peers’ main concern was about whether to use local or foreign banks, and whether the FX rates for foreign remittances were better onshore or offshore. 

Of course, there are causes for concern, especially about the direction of the economy in each country. Peers gave different views on this, especially in Colombia. But, generally, the problems companies face are manageable:

  • The biggest complaint was about the financial transaction tax in Colombia: as its name suggests, the “cuatro por mil” is a 0.4% tax on every money transfer above a monthly threshold. This can represent a significant cost when cash is being moved between banks, even within the same entity. There is a workaround which involves the use of a fiduciary: this does not work for transfers with third parties, and it blocks the cash for 24 hours. Another alternative for cross border international payments between subsidiaries is to settle them offshore.
  • All peers are working to improve working capital. Factoring and supplier finance solutions are available, but factoring is felt to be expensive. 
  • Other avenues for improving working capital include trying to use more modern payment methods. There was a feeling that these countries are maybe less...

 

Please LogIn /Register to access the full commentary and a further 150+ similar commentaries. If you receive our newsletter - use your email to LogIn / Request Password Reset
Topics covered in this report: 
Tax, Bank Relationships, Working Capital, Factoring, Payments - domestic, Payments - cross border, Payments-digital, payroll, Cash Repatriation, Hedging FX
Service providers discussed in this report: 
Banco Davivienda, Banco de Chile, Banco de Bogotá, Banco de Credito del Peru, Bank of America, JP Morgan, BBVA, Santander, Citi, Yappy

Please log in, or create a free account, to read the whole report summary.

Corporate Treasury & FX in South Africa

Report date: 
18 Feb 2025

Commentary

South Africa sums up a lot of what is good in Africa – and what is not so good. The country has a lot of problems, with a lot of violence and people living in poverty. At the same time, it possesses enormous mineral wealth, and has a tradition of being a business friendly environment - it is ahead of many African countries in this respect. Also, the years of isolation during the Apartheid sanctions mean that many local subsidiaries operate with a greater degree of independence than is usual.

What does this mean for multinational companies doing business there?

Basically, South Africa works. There is a lot of bureaucracy, and there are laws to promote the advancement of certain ethnic groups. Our peers’ activities there vary in size, but they are generally profitable. There are exchange controls, but the currency is convertible, and can be hedged onshore: offshore hedging is available in both deliverable and non deliverable forms, and does not drive a significant premium.

The main points:

  • Banking can be a challenge. A lot of international banks have scaled down their presence, or are exiting the market – HSBC is the latest example. There is a concern that a lot of effort may go into moving to an international bank, only for them to withdraw from the country – this happened to one peer with HSBC.
  • For the banks who remain, peers expressed the view that....

Please LogIn /Register to access the full commentary and a further 150+ similar commentaries. If you receive our newsletter - use your email to LogIn / Request Password Reset

Topics covered in this report: 
FX, Hedging FX, Bank Relationships, Cash Pooling - domestic, Netting, Cash Repatriation, Trapped cash, Intercompany loans, Collections - domestic
Service providers discussed in this report: 
Standard Chartered, HSBC, Citi, Standard Bank, First National Bank (S Africa), JP Morgan

Please log in, or create a free account, to read the whole report summary.

Managing KYC & AML in Corporate Treasury

Report date: 
27 Jan 2025

Commentary

KYC – we all love to hate it, together with its sibling, AML. One participant on the call even joked that KYC really stands for “Kill Your Customer”.

So, after more than ten years, where do we stand? Are things improving? Are we seeing an adoption of standardised data requests and central depositories? Or are banks still coming up with new requirements, and often repeating the same requests within their networks?

If anything, things are getting worse. Increasingly, companies are setting up dedicated internal departments just to handle KYC requests. 

Data

  • Data requirements still have not been standardised
    • Requirements vary by country
    • Banks do not accept that some information does not exist in all countries
    • There is inconsistency. The same bank will insist on an item in some countries, but not others
  • New requirements keep surfacing. For listed companies, banks are increasingly requiring personal data on management and directors. This is an extension of the UBO (Ultimate Beneficial Owner) requirement for private companies.
  • Some countries require,,,,
Please LogIn /Register to access the full commentary and a further 150+ similar commentaries. If you receive our newsletter - use your email to LogIn / Request Password Reset
Topics covered in this report: 
KYC, AML
Service providers discussed in this report: 
Citi, Société Générale, ING, BNP Paribas, JP Morgan

Please log in, or create a free account, to read the whole report summary.

Corporate Treasury & FX in Argentina

Report date: 
7 Nov 2024

Commentary

After Turkey and Egypt, this session discussed Argentina: have the shock devaluation and the rise in interest rates had the desired effect of making the currency more convertible, and starting the economy on the – slow and painful – road to recovery?

As in the other two cases, the response was one of guarded optimism. Business appears to be holding up, and the flow of currency out of the country has been improving. Also, as in the other cases, the exchange rate has stabilised. This does not mean there are no issues and everything is plain sailing: the Argentine consumer is going through a very difficult period. But one – Argentinian – participant said the pain is being accepted, at least for the time being. Inflation has started to come down: to put it in perspective, in September 2024, it had come down to an annualised rate of 209%, against 237% in August (source: BBVA). The central bank’s goal is 18%, and participants are budgeting for something between 30% and 50% next year,

Of course, this is Argentina, so nothing is simple:

  • Foreign currency remittances have improved – for current imports, i.e, ones since December 2023.
  • Many imports from before 2023 still cannot be settled. Various options exist:
    • BOPREAL bonds: these are three series of US dollar denominated bonds issued by the Argentine government, which will mature in October 2027 (series 1), June 2025 (series 2) and May 2026 (series 3). At maturity, the dollars can be remitted to settle import invoices, or, for series 2 and 3, dividends. These bonds can be sold in the secondary market, for a haircut which is usually about 30%. There has been talk of a new series specifically for old invoices.
    • Blue chip swaps: these involve using pesos to buy USD bonds, which can then be sold in dollars. The haircut on selling these varies: it has been as high as.....
Please LogIn /Register to access the full commentary and a further 150+ similar commentaries. If you receive our newsletter - use your email to LogIn / Request Password Reset
Topics covered in this report: 
FX, Hedging FX, Trapped cash, Cash Repatriation, Investments, Blue chip swap, Collections - domestic, Banking, Inflation
Service providers discussed in this report: 
JP Morgan, BBVA, Citi, Grupo Financero Galicia

Please log in, or create a free account, to read the whole report summary.

Corporate Treasury & FX in Egypt

Report date: 
29 Oct 2024

Commentary

Several countries with the worst financial crises have decided to implement painful measures to improve their economies. We recently covered Turkey; this report is about Egypt, and Argentina will follow soon.

The measures are well known: significant devaluation (usually more than 40%), and raising interest rates to punitive levels - 30% to 50% is the norm. The impact on the domestic consumer is significant, but the early signs are that there is some improvement. Inflation levels are generally coming down, foreign exchange shortages have begun to ease, and foreign businesses are starting to have greater confidence, though all remain cautious.

This is certainly the case in Egypt: participants on the call all reported business levels which were difficult but not dire, and less difficulty repatriating funds. Inflation has been 36%, coming down to a reported 26% in September 2024 – but with a peak of 70% to 90% on some key food staples.

Sadly, geopolitics cannot be ignored. Turkey and Egypt live in a troubled neighbourhood: Egypt has a border with Gaza - a massive influx of refugees could destabilise the country. Its own recent history is one of constant conflict between more radical religious elements and governments which tend to be authoritarian, but relatively secular and pro business. Importantly, the United Arab Emirates and Saudi Arabia were cited by participants as a major source of foreign investment, which has considerably helped with the foreign exchange situation. In particular, the UAE has signed a multi billion dollar agreement for the development of a significant area on the Mediterranean Sea – the precise amount is not certain, but it appears to be at least USD 15bn, with total value potentially being above USD 100bn.

There is a problem on the southern border as well: Ethiopia is building a dam on the Nile. Egypt takes a very dim view of this – but it is not receiving much publicity.

What does this mean in practical terms?

  • Pressure to use documentary credits (LCs) has....
Please LogIn /Register to access the full commentary and a further 150+ similar commentaries. If you receive our newsletter - use your email to LogIn / Request Password Reset
Topics covered in this report: 
Bank Relationships, FX, Hedging FX, Letters of Credit (LC), Customs, Factoring, Cash Repatriation
Service providers discussed in this report: 
Standard Chartered, HSBC, QNB, Citi, SWIFT, Commercial International Bank Egypt

Please log in, or create a free account, to read the whole report summary.

Pages