| The changing dynamics of corporate treasury in Ireland |
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By: John Gilsenan, John Gilsenan
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| Today’s corporate treasurers not only have to manage interest rate, foreign exchange, inflation, commodity and cash/financing risk, they also face the challenge of dealing with regulatory compliance risk, writes the new president of the Irish Association of Corporate Treasurers, John Gilsenan. |
Previously, the typical corporate treasurer had to manage two main risk ‘groupings’: (1) interest rate, foreign exchange, inflation and commodity risk and (2) cash management/financing risk, mainly optimising cash flows and deposit and loan rate returns. | | John Gilsenan |
However, in recent years, regulatory compliance risk has emerged as a very important third risk grouping to be managed by treasurers. This grouping encompasses compliance with applicable accounting standards, especially the adoption of International Financial Reporting Standards, and legal and other regulatory requirements such as insider trading, voluntary reporting and fitness & probity regulations.
In relation to investment funds, a relatively new trend is the use by corporate treasurers of money market funds as an alternative to fixed bank deposits. Security, liquidity and flexibility are similar between the two investment types, while money market fund returns can exceed those available from bank deposits and so are worth having as part of an investment management strategy.
As regards payments, the introduction of SEPA (Single Euro Payment Area) in 2008/09 should simplify euro payments in Europe, although it appears it will be of most benefit to retail bank customers, rather than to corporates, most of whom already have efficient electronic banking facilities for international euro payments.
Asset backed and loan book securitisation has emerged as a financial services discipline in itself and plays an increasingly important role in the work of corporate treasurers.
The Irish Association of Corporate Treasurers (IACT) was founded in 1986 with the aim of promoting the practice of corporate treasury management in Ireland and to provide a forum in which corporate treasurers can meet and exchange information.
The Association is a not-for-profit organisation with currently in excess of 300 members, including treasurers from major Irish public companies, multinationals and commercial state entities, as well as a significant number of smaller and medium sized companies. It also has many members in various professional services firms and also in domestic and international financial institutions based here.
The Association’s aims are to encourage and promote the study and practice of treasury management in Ireland, set guidelines for best practice and act as a forum for treasurers to interact and network with their peers and service providers.
Currently the Association has four main themes:
• Being the voice of the corporate treasurer
• Delivering best practice in treasury and corporate governance
• The changes in accounting standards, regulation and taxation
• The changing role of the corporate treasurer
In recognition of the importance of education, the association also runs a one-year, part-time programme for the Graduate Certificate in Corporate Treasury in conjunction with Dublin City University. Holders of the Certificate obtain also significant exemptions from the UK Association of Corporate Treasurers (ACT) examinations.
The association also organises seminars, conferences, training courses and social events for members. Notice of all these events are posted on the Association’s website www.treasurers.ie.
All seminar and conference presentations are available to members and are also posted on the Association’s website, comprising a valuable resource which adds to the value of being a member.
The Association is a member of the European Association of Corporate Treasurers www.eact-group.org and the International Group of Treasury Associations www.igta.org, each of which was formed to foster better contacts between treasurers and their Associations world-wide, to work towards a common view of technical matters of interest to treasurers and generally enhance the activities of member Associations.
The role of the treasurer has evolved simultaneously with the changes in the requirements of the business it serves. While basic financial knowledge (funding, cashflow and cash management) is a given, a treasurer is expected to have a thorough understanding of corporate finance, tax and regulatory compliance as well as contribute in a significant way to the overall strategy of the organisation for which they work.
The international focus of the Irish economy, in particular the presence here in more recent years of IFSC based treasury functions and of large multinationals with treasury operations has given depth and breadth to the treasury profession in Ireland. |
John Gilsenan is managing director of Porsche International Financing plc, and is president of the Irish Association of Corporate Treasurers.
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