| Working in corporate treasury |
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| Niall O’Shea examines employment opportunities in Ireland’s corporate treasury sector and looks at how recent world events have impacted on domestic operations. |
Corporate treasury activity in Ireland essentially falls into two categories, domestic and IFSC based. While all companies have some treasury activities, the accountant or financial controller in small and medium sized companies often performs these. However, larger domestic Irish corporates have treasury activities of such a volume that require one or more individuals to devote themselves fully to treasury management. Indeed most of our larger listed companies and semi-states have a full treasury department comprising of four to five people and sometimes more. The workload in these departments primarily focuses around the management of cash surpluses/deficits and foreign exchange exposures in the group, together with the securing of adequate long term funding.
In the IFSC, a number of international ‘Fortune 500’ companies have set up standalone companies, which effectively act as in-house banks to group companies around Europe and beyond, borrowing the surplus funds of some group companies to lend to other group companies with funding deficits. Similar to a bank, it will typically charge a margin over interbank rates to group companies in need of funds and typically pay around interbank rates to group companies with surplus funds for deposit, thereby earning its profit. The largest of these corporate treasury companies typically employ 20 - 30 people in the IFSC, covering the full range of activities from forecasting, dealing, deal confirmation, settlement, risk management etc and have balance sheets of a size more typical of a bank. Many of these treasury companies also factor debtors for group companies as a means of lending to these group companies in a tax efficient manner.
Getting into treasury
Quite a number of treasurers, particularly those in domestic treasury operations, came into treasury from the accounting function. Others jumped the fence from dealing in banks into a treasury role in a (non-bank) corporate. There are a number of formal education programmes available to those interested in a career in treasury. The Irish Association of Corporate Treasurers runs a graduate certificate in corporate treasury in conjunction with Dublin City University on a part time basis over two years. DCU itself runs a masters degree in investment and treasury on a part time basis over two years. In addition, the Association of Corporate Treasurers in the UK has a distance-learning programme to prepare students for its associate and membership examinations, with facilities available to take the examinations in Dublin.
Recent trends in the sector
Given the introduction of the euro, treasurers now have a smaller number of currencies to concern themselves with and consequently a smaller number of bank accounts to manage. This reduced number of currencies and bank accounts, together with the continuing improvement in the availability of electronic reporting of bank balances etc from the banks, has allowed treasurers to improve their cash management techniques, including cross border cash management.
Given the losses arising on a number of recent high profile derivative scandals, audit committees and directors generally are becoming increasingly conscious of the amounts of funds passing through their companies’ treasury operations and the resultant risks. Directors are taking a greater interest in the hedging versus speculative role of some derivative transactions and internal audit functions are being requested to visit treasury functions more regularly. Bank mandates are also receiving greater attention than in the past. |
Niall O’Shea is a senior manager in the banking and capital markets group within PricewaterhouseCoopers, specialising in corporate treasury. He also serves on the main committee of the Irish Association of Corporate Treasurers.
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| Article appeared in the September 2002 issue.
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