Download - Risk management, US Bank
U.S. Bank Global Transaction Services U.S. Bank Global Transaction Services
U.S. Bank SinglePoint is a registered trademark of U.S. Bancorp.
Presented to SBDC of IllinoisEric TrejoVice PresidentInternational Division
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The International Challenge Operations are global Banks are numerous and widespread Resources are limited Do more with less…
• Maintain foreign bank accounts
• Actively manage group liquidity
• Keep costs low
• Manage risk
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Options Do nothing
• Continue to spend time, effort and cost maintaining each account directly using each foreign bank’s proprietary electronic banking platform
Move to a “Global Universal Bank”• No such thing as a truly “Global Bank” – meaning a bank that has a service set full
enough to meet all customer demands in all countries
• More likely, these so called “Global Banks” have a full service set in a few countries, and a more superficial capability in several others
Leverage a focused multi-bank solution…
U.S. Bank SinglePoint is a registered trademark of U.S. Bancorp.
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The Multi-Bank Solution
Does your bank offer SWIFT to facilitate the exchange of information and instructions with your overseas banks?
Does your bank manage the connection to your existing banks, and able to offer referrals for new international banking relationships?
Does your bank provide a gateway for international information reporting and a method to execute payments remotely on your overseas accounts?
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Liquidity Management Manage your company’s international liquidity
using a Multi-bank Platform for International Information Reporting and International Request for Transfer• Access timely and detailed balance information
providing a “real time” view of your USD and foreign bank balances
• Optimize cash balances by maximizing investments and minimizing debt
• Actively control the flow of funds between your global accounts from one access point
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Sample Account Structure
MT101MT101Payments
MT940 MT940Information Reporting
GBP Account
CAD Account
EUR Account
SWIFTU.S. Bank
Foreign Bank 1.
Foreign Bank 2
Foreign Bank 3
Your Organization
MT101
MT101
MT940
MT940
MT101
MT101
SinglePoint
Swift Message Type:MT101: International Request for TransferMT940: Previous Day Statement Reporting
Foreign Exchange Risk ManagementForeign Exchange Risk Management
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Foreign Exchange Marketplace
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Foreign Exchange Products Defined Spot
Purchase / sale of one currency against another; For value (delivery) two business days from trade date (1 day for USD/CAD)
Forward Outright Purchase / sale of one currency against another at set rate for future settlement Rate comprised of market spot rate as well as forward points
FX Swap Agreeing upon two separate FX contracts for two separate value dates Typically involves spot value date against a future settlement date
Non-Deliverable Forward Synthetic forward contract settled against a deliverable currency; used for currencies
that are not freely traded
Option The right but not the obligation to purchase or sell one currency against another for
particular tenor, notional, and price
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Risk Management Process
Step 1: Define FX Risk Management Philosophy and Objectives
Step 2: Identify and Quantify FX Exposures• Include all relevant parties such as treasury, sales, tax, and accounting. What are our specific
risks?
Step 3: Develop Risk Management Policy and Strategy• Simply eliminate FX risk or are opportunities to maximize revenues present?• What hedging instruments will be used? Who is authorized to deal? At what limits?• Who will confirm and settle deals? Who will sign confirmations?
Step 4: Execute Strategy
Step 5: Monitor and Measure Strategy Performance
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Needs Spectrum - International Services
Degree of Globalization:
Wholly domestic
N/A
Limited foreign sales /
suppliers
Letters of CreditForeign ExchangeInternational Wires
Trading with…
Significant foreign sales /
suppliers
Automated trade services
FX hedging
Foreign sales office(s) / retail
outlet / Procurement
In-country accountsCoin / currencyLocal branch access Local payments / collections
Global position mgmt
Foreign management
offices
Global liquidity management
Pooling / netting
Extensive foreign
operations
Full array of global services
Global Banking Services Required:
Operating in…
Slide Concept courtesy Treasury Strategies
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Q & A