LatAm’s best corporate treasurers talk treasury, regulation and banking

For the first time, Euromoney has recognized Latin America’s best corporate treasurers as part of its annual best-managed companies in Latin America survey. Some 90 analysts were asked to nominate and vote for those corporate treasurers who they consider to be the best in their industry. Of the 72 nominated, seven are recognized as outstanding, with one overall winner: Fiorella Debernardi, treasury manager and investor relations officer of Peruvian consumer goods company Alicorp.

In their industry sector, the following are also acknowledged as the best corporate treasurer:

In their industry sector, the following are also acknowledged as the best corporate treasurer:

As part of the award, Euromoney interviewed Debernardi together with Banorte’s Arciniega, Femsa’s Salido and Asur’s Bartrína on the role of treasury, how they manage the function, the challenges of regulation, and their banking relationships. Euromoney: How strategically important is the treasury function to the growth and development of your company?

FD, Alicorp: The treasury function is important for the development of our company, because we ensure to take importance in working capital of the company as well as to reduce the effects of the exchange rate in our financial statements.

CA, Banorte: The stability of a bank lies in its liquidity management, capital management and optimization of financial risk balance, functions that are by definition the scope of the treasury.

LS, Femsa: The treasury of Femsa supports management of the resources generated by the group's business, always seeking capital protection and maximizing yields. The team is also responsible for obtaining the resources for the daily operation of the company, as well as the funds required to continue with the inorganic growth of the company.

The treasury is responsible for monitoring the financial risks, such as currency and interest rate exposure, and reducing them according to current policy risks.

CB, Asur: Through efficient management of the treasury we contribute to good operating performance of the company, maintaining the necessary level of liquidity and optimizing returns on temporary cash resources of the treasury.

Euromoney: What is the single most important decision you have taken as treasurer that has had a material impact on the financial performance of your company?

FD, Alicorp: The most important decision we have made in the treasury has been to determine the appropriate levels of currency hedges in the countries where we operate. It is very important for us to reduce our exposure to exchange rate volatility.

CA, Banorte: Funding mechanisms that allowed us to close the acquisition of Afore Bancomer by Banorte Financial Group.

LS, Femsa: The decision/project more relevant in which I have been part of, is the decision the company took to access again new international debt markets and the subsequent coverage of it. It was a team effort involving all levels of the organization, and it also allowed us to capture international resources, this way improving the financing costs of Femsa and significantly extending its maturity profile. With this arrangement Femsa increased its financial flexibility under extremely favourable circumstances to keep us moving forward in its strategy of long-term growth conditions.

CB, Asur: Recently, a series of exchange transactions that resulted in being favourable for the opportunity in which those transactions were made.

Euromoney: How do you manage the treasury operations? Who is involved, where, and what technology do you employ to enable you to manage this operation?

FD, Alicorp: Treasury operations are managed according to the complexity of the tasks. There are treasury functions that are executed at a corporate level and others that are executed at a country level. The treasuries of countries have certain autonomy for decision-making. CA, Banorte: Banks are complex entities that end up having their own proprietary systems. In addition to these systems, we also have access to specialized systems such as Murex, Reuters, Bloomberg and link systems with the central bank.

LS, Femsa: Femsa concentrates the financing, risk management and investment activities at a corporate level. We have a team of professionals with extensive experience in different markets, who are responsible for each of these areas under international standards, which has allowed us to achieve the objectives in the short, medium and long term.

Regarding payments, the company has a shared service centre that is responsible for processing this activity, among other things.

Femsa uses an ERP [enterprise resource planning software] for functions of recording financial transactions and system development in house to manage investments that allow us to integrate large and complex operations efficiently by providing greater control and expedite the process of making decisions, increasing the quality of our products and services.

In summary having processes established, talented and qualified human resources, in addition to Femsa’s IT tools these are key to generate an administration that responds effectively to the needs of the company and the global competitive environment.

CB, Asur: Fifteen companies operate in Asur and resources are managed centrally. Of course we use banking portals, and we have Oracle ERP and an additional business intelligence application developed in Asur with Microsoft tools that provide us with information for decision making.

Euromoney: What is the single most challenging piece of regulation, financial or otherwise, that you company is facing, and why?

FD, Alicorp: The most difficult challenge we are facing in the treasury is the volatility of the exchange rate in Latin America. To reduce this risk, we hedge currencies, interest rates, flow and balance. CA, Banorte: The most important challenge in the current context is to maintain profitability levels within the framework of implementing regulations issued by the Basel III.

LS, Femsa: In terms of the running of the treasury, it’s always a challenge managing the volatility of the markets. A couple of years ago one of our biggest concerns was the risk of counterparties, but that has been reduced as banks have increased their capitalization. As Femsa is a company with operations in 10 countries, the cost-effective management of financial complexity is linked to the team of professionals handling these issues in each country, that’s why as company we are always training them and enabling them to develop their skills. This combined with the established processes, has allowed us to reduce this risk.

Euromoney: What role or roles do your relationship banks play in helping you manage the treasury operation? Are the fees you pay them for this worth it?

FD, Alicorp: We work with global banks, regional and local banks; they give us advice and offer products according to their competitive advantage. Banks are important partners to carry out our treasury function. They provide us with integrated platforms, which help us to execute the treasury management.

CA, Banorte: Our relationships with other banks are not based on fees. Each and every one of the activities we conduct are based on the current market conditions, always choosing the best alternative according to the degree of specialization of the counterparty and the costs involved.

LS, Femsa: Banks support us in generating ideas and with implementation of the initiatives arising thereof. We always seek that the cost we pay to the banks is a fair return for the service they provide us, and suitable according to each product that we handle with them.

CB, Asur: Banks are an important part for the smooth running of a treasury, as they provide the tools for a proper operation, with the aim of achieving a better positioning. They offer different products or innovations to those who already have them, thereby opening a range of possibilities for companies. We believe that the fees that they charge us are reasonable.

Euromoney: Are your relationship banks providing you with better or worse advice and solutions in treasury management than ever before?

FD, Alicorp: Our relationship banks have been actively giving us advice. They provide us with innovative ideas to help us acquire products that suit our needs. CA, Banorte: Our relationship banks have been changing their profile through time. Before they were targeting specific products, currently they are concerned about learning more about their costumers' needs (us), which helps to facilitate better relations and explore new sources of business.

LS, Femsa: We have a scheme of two ways to work with banks. There is always an exchange of ideas on the management of different aspects of the treasury, and as a result there is a formation of a team around this. As banks understand Femsa better and its needs, the advice we receive from them has improved.

CB, Asur: We have been working with our banks for many years and therefore we have a relationship, they know our needs and we know what they can offer us.