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Citi PERSPECTIVES

Citi Perspectives | Autumn 2016

04 Perspectives for 2017: creating optionalityA look ahead to 2017 as treasury teams plan for new challenges

14 Brexit: the effect on corporatesAn assessment on the potential impact on different corporate sectors

Cybersecurity: the impact to the financial supply chainAn overview of the effect of cybercrime on the business and banking community

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Treasury and Trade Solutions transactionservices.citi.com

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Citi Perspectives | 1

WelcomeNaveed Sultan Michael Guralnick

Perspectives for 2017: creating optionalityRon Chakravati

Shared service centers: from operational efficiency to value creation Swati Mitra

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04

Regional treasury centers come of age in Latin AmericaGabriel Kirestian

Navigating regulations, rates and risk in Asia: three key trendsNishami Dharmaratne Deborah Mur

Taking onboarding into the 21st centurySabine McIntosh Rob Schlaff

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20

24

42

32

48

Commodity prices: the impact on trade financeKris Van Broekhoven

Corporate split or spinoff: finance in the hot seat Jeffrey A Miller Kelvin Ang Ambrish Bansal

Is cash still king?Ron Tauscher

52Global tax initiatives: the evolving regulatory environmentDan Stern

Cybersecurity: the impact to the financial supply chainRaj Shenoy

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14 Brexit: the effect on corporatesSteve Elms John Murray Peter Cunningham Roberto Di Stefano James Lee

2 | Treasury and Trade Solutions

WelcomeWelcome to the second edition of 2016’s Treasury and Trade Solutions’ Citi Perspectives. Throughout 2016, we have seen and continue to see new challenges across all industries and geographies, challenges that we are addressing to support our clients’ commercial growth agendas. These range from uneven macroeconomic dynamics to concerns related to increasingly sophisticated cybersecurity risks, currency volatility, regulatory compliance, and changes in the banking landscape. Together, these challenges have made the corporate treasury team’s job all the more complex, yet all the more important.

Naveed SultanGlobal Head, Treasury and Trade Solutions, Citi

Michael GuralnickGlobal Head, Corporate and Public Sector Sales, and Global Marketing, Treasury and Trade Solutions, Citi

02


As businesses continue to look for

transformational growth opportunities,

treasury teams are looking for advice

and insights leading to the design of

value-added solutions that reduce

costs, lower risks, and optimize

operating models to support enterprise

aspirations and strategies. Companies

are leveraging new e-commerce

channels for growth, and these new

channels have become catalysts

for financial services innovation, as

corporate and consumer payment

and collection channels intersect and

require new and evolved trading and

treasury models.

In this edition of Citi Perspectives, we

take a closer look at some of these

key corporate challenges along with

the latest trends that are having an

impact on treasury activities globally.

Among the topics we cover is the

understanding of the increasingly

complex regulatory, rate, and risk

landscape in Asia. In “Navigating

Regulations, Rates and Risk in

Asia: Three Key Trends,” we examine

banking regulatory and interest-rate

changes taking place in the Asia-

Pacific region, and how diverse legal

frameworks, economic systems,

commercial languages, and banking

infrastructures are presenting unique

challenges and opportunities for

corporate treasurers.

Another headline-grabbing story is

the UK EU membership referendum.

We look at the potential implications

of Britain’s pending exit from the

EU as it pertains to several different

industries, in particular aviation

and healthcare. We delve into how

this is likely to affect sales, research

and development, regulations, and

treasury and finance planning.

As news of cyberattacks seemingly

dominate the headlines on a daily

basis, corporates and banks are

constantly looking to stay out of the

headlines. In “Cybersecurity: The

Impact to the Financial Supply Chain,”

our industry experts explore the

effect of cybercrime on the business

and banking community and, more

specifically, how treasury and the

financial supply chain is vulnerable.

We share the latest best practices on

proactively improving internal fraud-

prevention and post-attack mitigation

within the financial center.

As we are seeing a growing trend

towards centralization via Shared

Service Centers, we include an article

on how many of these centers are

increasingly focused not only on

operational efficiency but also on

value creation.

Through the articles in this edition

of Citi Perspectives, we hope you will

gain critical insights into issues that

concern you and your business. We

stand ready to work with your teams

to design optimal solutions to address

these business challenges and achieve

your strategic goals.

As always, we would be delighted to

hear your thoughts and views on any

of the issues raised by the innovative

thinking of our thought-leaders.

Citi is ready to design optimal solutions to address business challenges and your strategic goals.

Perspectives for 2017: creating optionality


04

As corporate treasurers look ahead to 2017, the global outlook remains mixed. Gradually improving economic growth provides positive momentum.


Ron ChakravatiGlobal Head, Treasury Advisory and Solutions, Treasury and Trade Solutions, Citi

Macroeconomics: sluggish, if steady Citi projects global GDP growth to be slightly higher in

2017, at 2.7%, as growth picks up in emerging markets and

the US. With inflation low, monetary policies of most major

central banks are likely to remain accommodative into

2017, with the US an outlier. Despite an outlook for rising

US interest rates, on FX rates, Citi expects the rising dollar

cycle to be coming to an end, with US dollar depreciation

against G10 currencies of 3% over six to 12 months.

Uncertainties in the macroeconomic outlook, geopolitical trends, financial system regulation, and moves in tax compliance create new challenges for treasury teams in planning forward. In our client engagements, Citi’s Treasury Advisory Group finds corporate treasury teams actively considering scenarios and assessing actions.


Financial system regulations: change is a constant

Geopolitics: downside risksThe situation remains fluid — from the

continuing conflict and displacement

of people in the Middle East to the

changing geopolitics of energy and

new security developments in the

South China Sea. Brexit and the US

election cycle (regardless of who

becomes president) are symptoms

of the increase in uncertainty in

even major markets. In Citi’s view,

geopolitical instability will be a feature

of the landscape for the foreseeable

future across emerging markets and

industrialized economies, creating

downside risks for the overall

growth outlook.

Treasury teams are aware, painfully perhaps, that know-

your-customer (KYC) and anti-money-laundering (AML)

regulations have placed tighter controls on bank account

and transaction management. Most are also broadly aware

that Basel III-related regulation has reshaped banks’ capital

and liquidity management. What is not so well appreciated is

that changes continue to ripple through the financial system.

For example, recent Basel Committee proposals on bank

leverage ratios and on capital assessment for loans to large

corporates may have impacts on notional pooling, a popular

cash management technique, and on the cost of bank credit

lines. Any impacts will depend on the finalized rules and on

what national regulators implement. The larger point is that

change is becoming a constant. Treasury teams need to

maintain an ongoing dialogue with relationship partners on

what is coming and the implications for relationships.

Macroeconomics

Challenges

Tax Geopolitics

Regulation


The view ahead: creating optionality

Tax: keeping treasury busyThe US Treasury’s recent proposals under Section 385 have

caught the attention of US- and foreign-based multinationals

alike. The goal is to limit “earnings-stripping” through the use

of cross-border debt that reduced US income taxes, but it has

consequences that may have been unintended. Depending

on the final rules, companies may have to change how they

manage day-to-day internal funding and treasury operations.

Many widely used cash management techniques, from cash

pooling to in-house banking, may need to be modified.

Meanwhile, the OECD-led Base Erosion and Profit Shifting

(BEPS) initiative is transitioning into implementation in many

countries. Here, the chief goals are to improve cohesion of tax

rules across countries, while ensuring greater transparency

and compliance. As a consequence, some companies are

changing trading models that drive where taxable income

is generated. Since trading model changes may affect the

company’s cash and funding needs, both in amount and where

these arise, treasury teams will be kept busy.

Treasurers may sometimes feel as if

new challenges never cease to arrive.

What is clear is they cannot lessen the

drive to centralize treasury operations

and automate processes. Doing so

equips treasury teams to shift away

from tactical or operational mode,

creating capacity to manage the

unexpected and to bring treasury’s

unique perspectives to the business

for greater value.

Shared service centers: from operational efficiency to value creation

08



As companies deal with the challenges of globalization, economic uncertainty, new regulations, rapidly changing technology, and a volatile business environment, many are searching for ways to reduce cost and complexity in their operating model.

In the interests of making the

most of investing in technology,

simplifying operating models, and

driving corporate governance, more

and more corporates are setting

up shared service centers (SSCs).

SSCs can be used to automate and

standardize processes, whether at

regional or global levels, and improve

the efficiency of many back-office

functions, e.g. payment processing,

accounts receivable, and financial

reporting. In doing so, companies

often find that they can improve

working capital and optimize cashflow,

support growth with increased

productivity, and position themselves

to more effectively manage risks.

By centralizing such functions,

companies also avoid the difficulties

of having to replicate the necessary

infrastructure and skills in each

market as they grow organically, or

through mergers and acquisitions.

While the success criteria and key

performance indicators for SSCs

remain cost-savings driven, one of

the key characteristics that is defining

the evolution of these centers is the

recognition of value add and service

enhancement that they can bring

with data analytics, technology-led

solutions, and risk management being

key contributing factors.

Given our extensive SSC client

base at Citi of more than 1,200

clients, we increasingly find that

SSCs are becoming more integral to

organization-wide strategic initiatives

such as deployment of technology,

procurement initiatives, mergers,

acquisitions, and spinoffs, and growth

in emerging markets. We have not

seen significant shifts in the location

choices for SSCs, with Asia, Central

and Eastern Europe, and Central

America remaining highly attractive,

Swati Mitra Global Sales Leader, Emerging Market Corporate Clients, Treasury and Trade Solutions, Citi


and North America and Western

Europe still seeing some hubs in

selected sectors.

Geographic expansion and changes

in organizational constructs are

widening the scope of activities

for SSCs. Many have evolved from

low-cost, high-volume processing

hubs to centers of excellence, and

ultimately they are moving towards

global organizations, often referred to

as global business services. By bringing

together operational activities across

multiple functions and regions under

a single organizational framework,

companies are able to achieve end-to-

end ownership of significant functional

process flows that are supported

by strong governance models with

strategic business partners.

As a result of their broader role,

reporting lines are also changing. A

financial SSC may have reported to

the treasurer or CFO in the past, but

today we are seeing the responsibility

increasingly shift to the global head of

supply chain, the head of procurement

or the chief operating officer. These

may have different objectives from

those of the CFO or treasurer, which

is further fuelling an expansion in

responsibility, e.g. procurement.

Centralizing procurement creates

greater purchasing power and

economies of scale, but building

synergies between procurement

and finance also offers considerable

advantages in areas such as working

capital management using techniques

such as supply chain financing. It is

also becoming increasingly important

for SSCs to align with finance and

treasury on roles and responsibilities

and performance metrics.

Many of Citi’s SSC clients are

adding functions, expanding to new

geographies, and pushing for further

efficiencies in their processes to bring

their SSCs to the next level. Areas

such as reconciliation, reporting

and analysis, travel and expense,

data management, and supporting

e-commerce platforms and flows are

among the wider range of functions

being centralized to drive incremental

value from a purchase-to-pay and

order-to-cash perspective.

Technology is playing an increasingly

important role in SSCs driving additional

value. With the evolution of cloud-

based technology, mobile, new industry

standards for file formats, and access to

innovative data analytical and diagnostic

tools from banks like Citi, SSCs can

play a crucial role in identifying new

areas for improvement, e.g. optimizing

cross-currency payment flows, lowering

payment processing costs by switching

from paper to electronic, implementing

card-based solutions, and improving

days sales outstanding by implementing

automated receivables reconciliation

solutions. As cyberattacks become a

growing reality, SSCs can also lead

the way in partnering with banks like

Citi to implement solutions such as

host-to-host connectivity, mobile

alerts, digital signatures and workflow

tools that mitigate cyberthreats and

cyberfraud risks.

Many of Citi’s SSC clients are adding functions, expanding to new geographies, and pushing for further efficiencies in their processes.


In some industries, e.g.

pharmaceuticals and technology,

SSCs are pursuing offshoring and

outsourcing, driving increased

automation and pushing an agenda

of process streamlining. Such

organizations view the savings from

wage arbitrage as unsustainable and

prefer to move to a variable cost

model. There are pros and cons to

this approach but we have seen some

companies move in this direction.

A key factor in delivering best-in-class

SSC operations is close collaboration

with an experienced banking

partner. This is particularly true for

organizations that are expanding

their SSC operations, and that

need guidance on different banking

regulations in each market and

advice on the optimal roadmap that

will help them progress given their

dependencies on technology, people,

and processes. With our geographic

footprint at Citi, which includes access

to clearing systems in more than

100 countries, and our large client

base of 1,200 SSCs worldwide, we are

focused on providing advisory, insight,

and solutions through webinars,

workshops, and SSC forums in each

region, allowing our clients to share

their experiences and discuss best

practices. While there are clear

challenges in the journey to and

ongoing contribution from SSCs, the

tangible and intangible rewards are

often significant.

A key factor in delivering best-in-class SSC operations is close collaboration with an experienced banking partner.

12



Many companies have looked to revise their earnings and growth forecasts as a result of the impacts of depreciating currencies, consumer and business caution, and the resulting slowing of the economy. From a treasury perspective, these top-line impacts should prompt companies to redouble their efforts to improve expense management, streamline processes and enhance working capital.Steve Elms, EMEA Head, Corporate and Public Sector Sales, Treasury and Trade Solutions, Citi

14

The UK’s departure from the European Union will have significant short-, medium- and long-term impacts. EMEA Head of Corporate and Public Sector Sales Steve Elms is joined by fellow Treasury and Trade Solutions sector specialists John Murray, Roberto Di Stefano, Peter Cunningham and James Lee to assess the outlook for the airline, automotive, healthcare, and technology, media and telecoms sectors in the wake of the UK’s decision to leave.

Brexit: the effect on corporates

SECTOR SPOTLIGHT



Steve Elms EMEA Head, Corporate and Public Sector Sales, Treasury and Trade Solutions, Citi

While the unexpected outcome of the

UK referendum on European Union

(EU) membership — Brexit — created

short-term volatility, financial markets

have since largely recovered their

losses and sterling has regained

some ground against other major

currencies. In the short term little will

change for corporates active in the

UK: the UK’s exit from the EU may be

years away and corporates’ needs for

payments, receivables and treasury

management will continue as before.

However, with no commitment to

when Article 50, which will herald

at least two years of negotiations

in advance of the UK’s official exit,

will be triggered, or to how the UK’s

trading relationships with the EU

and the rest of the world will evolve,

companies face a significant period of

medium- and long-term uncertainty.

Many companies have looked to revise

their earnings and growth forecasts as

a result of the impacts of depreciating

currencies, consumer and business

caution, and the resulting slowing

of the economy. From a treasury

perspective, these top-line impacts

should prompt companies to redouble

their efforts to improve expense

management, streamline processes

and enhance working capital.

The outcome of negotiations will be

critical to determining to what extent

certain corporate functions will

continue to operate in the UK.

We are seeing many clients adopt

a wait-and-see approach before

making any wide-ranging strategic

and treasury decisions, and we

predict many companies will wait

until Article 50 is triggered so that

the UK’s goals will be clearer — for

instance, whether or not the UK will

establish a trading relationship with

the EU similar to that which Norway

or Switzerland has established.

The inability to access the Single

Market and the curtailing of EU tax

treaties and directives may trigger

certain company — and supply chain —

activities to relocate, which, in some

cases, may have an impact on the

location of regional treasury centers

(RTCs) or in-house banks. But it should

be put into context: measures such

as section 385 of the US Internal

Revenue Code and the OECD/G20 Base

Erosion and Profit Shifting project are

seen as having as significant an effect

on RTCs, in-house banks and pooling

structures as Brexit. Nevertheless,

the UK should remain an attractive

environment for such functions given

its secure, business-friendly regime

and ability to provide and attract

talent, all within the close proximity

of global banking partners.

The inability to access the Single Market and the curtailing of EU tax treaties and directives may trigger certain company and supply chain activities to relocate.


AirlinesThe airline sector is crucial to the UK. It contributes

USD100 billion to the economy and is tied to 1.3 million

UK jobs. In 2015, there were 160 million trips from the UK,

two-thirds of which involved travel to Europe.1

Uncertainty following the vote to leave has already led to

reduced forecasts from Ryanair, easyJet, IAG and Lufthansa:

the latter three have issued profit warnings. Earnings are

likely to come under pressure from a weaker pound and

slowing GDP growth. As a result, traveler numbers are

expected to fall by 3%-5% (reducing airline yield) as it is

suspected that foreign holiday costs increase and consumer

confidence falls.2

In response, airlines are reviewing

their capacity needs. Ryanair has

confirmed that it will reduce capacity

at Stansted and focus on its future

growth in EU airports, while Delta

Airlines plans a cut in transatlantic

capacity to the UK this winter.

Regulatory change is anticipated as

the greatest challenge facing airlines.

The regulation within the EU aviation

market has produced safe, efficient,

and economical air connectivity across

Europe, while the EU and US Open Skies

agreement — which allows carriers from

either market unlimited access to the

other — has benefited all carriers.

Both markets are potentially

threatened by Brexit. Ideally the UK

will remain part of the European

Common Aviation Area (ECAA),

which would give UK-based airlines

continued access to all EU airports.

However, this would require

acceptance of EU aviation law across

all areas limiting the UK’s ability to

define its own policy. The alternative

would be to negotiate a bilateral

agreement, similar to that between

the EU and Switzerland. Without

a successful agreement, there is a

possibility that UK-based airlines, such

as easyJet, will no longer be able to

operate intra-EU routes. The UK may

also need to negotiate agreements

with other countries such as the US.

Overall, the UK leaving the EU could

represent a huge challenge for UK-

based airlines, which, in addition to

considering its strategic implications,

must also review their cash, liquidity,

and treasury structures, which, in

turn, could lead to them to seek

advice on their options.

John MurrayEMEA Sector Head, Industrials, Treasury and Trade Solutions, Citi


HealthcareThe impact of Brexit on the healthcare sector is likely to

be significant and varied. For pharmaceutical companies,

Brexit could reduce sales if an economic downturn leads

to reduced spending on the National Health Service,

although the UK is just 3% of global sales (according to

Intercontinental Marketing Services).

More importantly, Europe accounts for 56% of UK

pharmaceutical exports: any change in trading rules

could have major consequences.3 Similarly, the potential

implementation of new manufacturing and safety standards

in the UK could increase costs.

The UK is a global center of excellence for research and

development. However, it relies heavily on EU funding:

GBP1 billion (equivalent to 25% of public funding) comes

from the European Research Council and could be lost

following Brexit.4 It is unclear if the UK government will

have the capacity or appetite to replace this funding: one

alternative could be increased pressure on the private

sector to invest more (it contributes the equivalent of

1.06% of GDP towards R&D, below the EU average and

80% lower than German businesses).5

Opting out of EU clinical trial

regulations could affect adjacent

services, such as contract research

organizations: the UK currently ranks

first in the EU for the number of

phase I trials, and second or third for

phase II and III trials.

Brexit could result in the relocation

of the European Medicines Agency

(EMA). It employs 600 people in

London and, more importantly,

approves drugs across the EU: its

presence in London encourages

international pharmaceuticals

groups to locate their European

base in the UK, and foreign direct

investment may fall following the

EMA’s relocation. However, the post-

referendum announcement that

GlaxoSmithKline will invest GBP275

million in three British manufacturing

sites is encouraging. Yet, the EMA

leaving the UK could also result in

delays in licensing and approving

new drugs, affecting patients and

increasing costs.

Given the absence of detail about

Brexit, corporate treasuries should

focus on contingency planning

in relation to cash management

structures and group legal structures

(i.e. which legal vehicle manufactures

products, earns royalties, and

distributes to end markets). In

addition, given margin compression

as a result of a more complex

regulatory environment — as well as

the potential pressure to increase

R&D investment — corporates may

look to fund this by increased free

cash generation through improved

working capital practices.

Peter Cunningham EMEA Sector Head, Consumer and Healthcare, Treasury and Trade Solutions, Citi


AutomotiveThe UK produced 1.6 million cars in 2015 — making it the

third-largest producer in Europe — and is home to 16 of

the world’s 20 biggest automotive suppliers that produce

locally. Brexit, therefore, may not only have an impact on

the UK economy but on the global economy.

Leaving the EU generates four main risks for the UK auto

sector. Immediate risks include sterling depreciation,

which, while benefiting exports, will result in increased

costs of imported parts. Meanwhile, currency-hedging

Roberto Di Stefano Italy Sector Head, Automotive, Treasury and Trade Solutions, Citi

costs are expected to rise, especially

for non-UK companies, with significant

translational effects. In addition,

Brexit could reduce economic growth

in the UK and in the EU. Consumer

spending on autos could fall as a

result: in response, some non-UK

companies could freeze planned

UK plant investments. This could

present challenges given the need

for significant investment in new

auto technology.

In the medium and long term, the

auto sector faces greater risks. Since

77% of passenger cars produced in

the UK are exported — 44% to the

EU — the loss of tariff-free access to

the single market and other countries

that have free trade deals with the

EU would make exported vehicles

from the UK more expensive.6 Over

time, auto companies could respond

by shifting production, with low-cost

locations best positioned to benefit.

Furthermore, auto firms need to be

aware of the implications of Brexit

for other sectors, most notably

finance. Given their high leverage,

supply-chain finance requirements,

and complex treasury and cash

management structures, most

automotive companies have close

relationships with the City of London.

As the finance sector evolves after

Brexit, auto company treasurers

may need to reassess their banking

relationships if the UK potentially

loses its EU passport rights.

1 See The Impact of BREXIT on UK Air Transport, IATA, June 2016. 2 The Impact of BREXIT. 3 www.rolandberger.com/en/misc/press/Press-Release-Details_3458.html, last accessed on 2 August 2016. 4 www.cbi.org.uk/global-future/case_study02_pharmaceutical.html, last accessed on 2 August 2016. 5 See www.digital-science.com.

James Lee EMEA Sector Head, Technology, Media and Telecommunications, Treasury and Trade Solutions, Citi

Technology, media, andtelecommunications (TMT)The UK has become a leading global hub for tech startups.

This is driven by access to skilled workers from the UK and

overseas, the UK’s pro-digital agenda, access to investment

capital through the banking sector and venture capital,

and a favorable regulatory and political environment

encouraging entrepreneurship.

In 2015, new tech startups raised GBP1.3 billion in funding,

creating 20,000 jobs.7 However, these startups, including

fintech companies, are reliant on the freedom of movement

of international talent, which could be harder to attract

following Brexit.4 Similarly, the high level of investment

in the UK’s tech startups — by banks, venture capital and

tech incubators — could potentially be put at risk. Indeed in

the month following the referendum, USD200 million was

invested compared to USD340 million in the same period a

year earlier, reflecting the investor uncertainty surrounding

what the UK’s exit from the EU will actually mean.8

The UK’s fintech sector has been one of the few sectors

to enjoy impressive growth in recent years: it generated

GBP6.6 billion in revenue and around

GBP500 million of investment in

2015, and it employs 61,000 people,

representing 5% of the total financial

services market9. Uncertainty about

fintech companies’ ability to operate

easily across borders post-Brexit could

hamper fintech’s development.

For TMT companies, the potential

impact of Brexit on the current benign

regulatory environment is critical — for

example, for mobile network operators

(MNOs), European roaming charges are

due to be abolished across Europe from

2017, and it is unclear what will happen

post-Brexit for the UK MNOs. For fintech

companies, the Digital Single Market,

announced in May 2015 (and the UK’s

championing of this), should pave the

way for even greater Europe-wide

e-commerce. It is now unclear whether

UK consumers and companies will

benefit from these changes.

However, morale in the UK TMT sector

has been boosted both by SoftBank’s

acquisition of UK chip designer

Arm Holdings and Amazon’s post-

referendum announcement that it will

increase hiring and will open a series

of data centers by 2017 in the UK (a

core hub country for Amazon, where

Amazon has almost 16,000 employees).

As Amazon UK Country Manager Doug

Gurr said recently: “Amazon has Silicon

Valley jobs in the UK.” But for all TMT

companies active in the UK (and their

treasury teams), there is a need to

analyze the implications of Brexit — as

its character becomes clearer — and

seek support so that any potential

impact it might have can be minimized.

6 www.rolandberger.com/en/misc/press/Press-Release-Details_3458.html, last accessed on 2 August 2016. 7 www.londonandpartners.com/media-centre/press-releases/2016/20160725%20-%20Tech%20investment%2016%20H1, last accessed on 1 August 2016. 8 See www.londonandpartners.com. 9 www.consultancy.uk/news/3338/uk-fintech-capital-of-the-world-but-competition-is-heating, last accessed on 1 August 2016.


Regional treasury centers come of age in Latin America

20

Bringing treasury functions under one roof through a regional treasury center offers significant opportunities for standardization and optimization, but careful planning and execution are required to ensure the project achieves its goals.

SECTOR SPOTLIGHT



Gabriel Kirestian Latin America Sector Head, Branded Consumer Goods, Healthcare, Technology, Media and Telecommunications, Treasury and Trade Solutions, Citi

Corporates operating in Latin America

face a wide range of challenges.

Their treasurers need to support

the business as it seeks to grow

against a backdrop of macroeconomic

and geopolitical volatility in some

countries. At the same time, the

regulatory and tax landscape across

the region is shifting and technology

is advancing rapidly: digitization and

innovation are creating potential

risks, such as cybersecurity, but also

offering new opportunities, such as

Big Data analysis, for example.

Given this environment, many

companies are expanding the role

played by treasury and finance

and charging them with four main

goals. The first is to improve funding

efficiency through greater use of

internal funding and enhanced

working capital management. The

second is to manage regulatory

change effectively to address

challenges and harness opportunities.

Thirdly, treasury is being tasked with

transforming and centralizing itself.

A fourth objective is to leverage

technology in ways that offer a clear

return on investment.

Treasury’s response has been to

supercharge its standardization,

centralization, and optimization

strategy through the creation of

regional treasury centers (RTCs).

RTCs differ from shared service

centers (SSCs), which are typically

operational in nature and focus on

process optimization, often in relation

to high-volume low-value payments and

receivables. By contrast, RTCs play a

more varied and strategic role in terms

of treasury functions (although policy,

strategy, and procedures are usually set

by group treasury at corporate level).

The functions carried out by RTCs

differ between companies. However,

typically, RTCs fund business units,

manage liquidity and working capital,

and forecast cashflows. They identify

risks (including those associated with

regulatory change) and manage them

by executing hedging strategies for

foreign exchange, commodities, and

interest rates, as well as executing

trades associated with short-term

investment and trade instruments. In

most instances, RTCs coordinate bank

relationships and provide support to

the business, and in some companies,

they may also be responsible for

leveraging data and digitization to

drive change.

A four-phase approach to centralizationA project to create an RTC with

the objective of standardizing

and optimizing processes through

centralization must typically go

through four distinct phases to

achieve its desired results.

• Treasury should start with thorough

due-diligence and data-verification

reviews that cover every aspect of

how it functions. How many bank

relationships and accounts does

the group have in each country?

What functions do banks provide

and what type of transactions are

made by each business unit? And

how do banking regulations affect

the migration of certain treasury

operations to an RTC? Only by fully

understanding its existing structures

and relationships — and their

shortcomings — can treasury plan

and implement change successfully.

• Once a company has the

information it needs to make


decisions, it can begin to rationalize

its existing structures and

relationships. Many companies

operating in Latin America have

dozens of banks and hundreds of

accounts (often built up through M&A

activity or because local businesses

were responsible for establishing

bank relationships). In most cases, a

handful of key banks and a few dozen

accounts would deliver enhanced

visibility and control, greater

efficiency, and lower costs.

• Once rationalization has been put

in play, treasury can then task its

slimmed-down bank group with

standardization, requiring it to

use standard formats (such as

ISO 20022 XML) and common

connectivity standards, such as

SWIFT — one bank can be appointed

to receive information from the

others (using common standards)

to ensure centralized visibility. At

the same time, the complexity of

processes can be reduced and data

capture automated as part of the

introduction of best practices.

• Finally, treasury can move on to the

integration phase, deciding whether

to create an SSC or reduce in

number (or eliminate) local treasury

departments, for example, as well

as integrating systems across the

enterprise.

The path to treasury centralization Within the treasury, there are

multiple functions. Ultimately, it

may be desirable for all of them to

be centralized in an RTC. However,

such an aim is unlikely to be

realistic in the first place. Instead,

corporations should focus on the

standardization and the optimization

of those processes that are easiest

to centralize and that deliver the

greatest gains.

As described above, prioritizing

banking strategy and account

structures can be beneficial because

they can facilitate other aspects of

centralization. Information services

and regional visibility play a similar

role which can lead to a more

efficient centralized cashflow forecast

process that is usually followed by

local payments, supplier financing,

international payments, and tax and

custom payments. More challenging

steps that should come later in the

project management workflow include

purchasing, travel and entertainment

cards, FX centralization, and account

receivables management.

Managing an RTC project to a successful conclusionThe creation of an RTC involves

significant operational change for a

company. In order to minimize disruption

and maximize results and the pace

of change, careful preparation is

necessary. Treasury must begin with a

clear vision and scope for the project so

that benchmarks and timelines can be

established and progress evaluated at

multiple stages. To ensure organizational

support, the project must be publicized

by obtaining early buy-in from senior

figures within the company: local

operational resistance to centralization

should not be underestimated.

Establishing an RTC is a major

undertaking. But corporates do

not have to face the challenges

involved alone. Citi offers support,

expertise, and solutions that address

every aspect of standardization and

optimization, and it has a proven track

record of helping companies in Latin

America to implement effective RTCs.

24

SECTOR SPOTLIGHT

In the swirl of banking regulatory and interest-rate changes taking place in the Asia-Pacific region today, demands on corporate treasurers are intensifying. What key trends should they look out for in 2016 as they navigate a landscape marked by diverse legal frameworks, economic systems, commercial languages, and banking infrastructures?

three key trends

Navigating regulations, rates and risk in Asia:



Trend #1

Interest-rate environmentsIn 2015, we saw 24 rate changes across

key markets in Asia. Since entering

2016, we have had another eight rate

cuts — and counting — the most recent

following the Reserve Bank of Australia’s

announcement on 3 May that it had

reduced the target interest rate by

25 basis points (bps). Often, inflation

considerations are the main reasons for

such actions by central banks.

The impact of these rate cuts to

economic constituents, which include

individuals, companies, governments,

and many other organizations, is

considerable. In 2015 alone, this

amounted to 6% in value reduction

in Asia, which they would otherwise

have been able to create through their

assets earnings, or through liquidity

optimization. This is a phenomenal

change compared to the last decade,

when interest rates were generally

high in most Asian markets.

This is one of the dilemmas faced

in managing treasury today —

understanding the rate environment,

what strategies you can adopt, which

solutions, tools and platforms are best

for your organization when dealing

with these uncertainties, and what

methods you can deploy to bring that

value back to your organization.

For some treasurers, it could be

better refinancing short- to medium-

term debt or widening the range of

investments with a view to gain higher

yields. For others, it could be a simple

optimization of liquidity. While the

objectives can vary, the starting point

can be an honest evaluation of where

your cash is — is it in the fungible

markets where cash can be moved or is

it in trapped markets? Is the cash used

well domestically or is there a need to

look at transfers or lending out to HQ

or another subsidiary? Then, if you

actually have the right solutions and

systems in place to manage, you can

gain visibility.

Rate cuts are one salvo in the

monetary policy arsenal — the other

new development is negative interest

rates. For some markets, this is a

chance to reinvigorate their economies

when all other monetary policy tools

are exhausted. This is an unorthodox

view, ushering in a new era for central

banks globally.

Negative interest rates are things we

have seen more of in Europe, but their

implications are far broader. Within

Asia, Japan has been the latest to join

the stream. In January 2016, when the

Bank of Japan announced its negative-

rate policies, the financial markets

reacted disproportionately, even

though the policy applied mainly to

selected current-account deposits that

banks held with the Bank of Japan.

Since the announcement, Japanese

government bonds have seen volatile

price swings, mainly with longer-dated

instruments.

Nishami Dharmaratne Asia Pacific Head, Regional Liquidity and Investment Solutions, Multinational Client Segment, Treasury and Trade Solutions, Citi

Deborah Mur Asia Pacific Sector Head, Industrials, Energy, Power and Chemicals, Treasury and Trade Solutions, Citi


However, it is important not to make

assumptions, as the way negative

interest rates have been implemented

reflect how the practice in each

market can be very different. The

general expectation is that banks

would review the impact and possibly

implement charges for those deposits

held in the currencies that are yielding

negatively. Some regulators recognize

the concept, but are struggling to

understand its execution so there can

be variations in the process.

China and Korea, for example, are not

necessarily considering whether banks

can go ahead and impose a charge, but

are reviewing the best approach for

this concept.

What is more important for the treasurer

is carefully examining the billing

currencies, understanding the charge

methodologies in each market, and

evaluating the pros and cons of liquidity

held in these currencies. Do not forget

to consider the long-term view of these

currencies before making decisions.

Trend #2Varying degrees of regulationsOne significant regulatory impact

that is well known is Basel III, which is

primarily a measure to ensure banks

are safe and sound from a capital,

leverage and liquidity perspective. While

this is mainly a banking regulation,

corporates will start to feel the impact

as their partner banks begin adopting

various strategies to deal with it. In

particular, both short-term (less than

30 days) and long-term (beyond 1 year)

views on liquidity measures will become

extremely important to banks.

This means that banks will closely

monitor the deposit values and

operational nature of the bank

accounts and the level of stability of

the deposits. Treasurers will need to

evaluate the value of the deposits

created and what the core liquidity is

versus strategic liquidity.

The treatment of these two types

of liquidity can be different — hence

earning power can vary.

Another factor for consideration is

the general regulatory environment

itself, which affects the way companies

operate. This is particularly complex

in Asia, where there are nearly 16

markets, all of which have their own

legislative systems, tax systems, and

company legislations, which define

many different intercompany rules,

thin capital thresholds, and numerous

commercial guidelines.

Take, for example, Vietnam’s

announcement last year that US

dollars would not attract any interest

onshore. If yours is a USD-invoicing

company, your onshore USD liquidity

will no longer attract any yield.

Or consider Indonesia. Indonesian

requirements are increasingly focused

on commercial transactions. For a start,

every commercial contract in Indonesia

must be in the local Bahasa language.

Secondly, every commercial transaction

needs to be settled in Indonesian

rupiah. If you are a dollar-based

company, you are typically invoicing in

dollars, which was allowed in the past,

but which is no longer the case. You will

need to consider better ways to draft

your invoices, collect in local currency,

and then decide what to do with the

rupiah once you have collected it.

If companies do not have the on-

ground expertise or the footprint


to deal with that, they can turn to a

banking partner equipped to support

them and provide solutions.

Over in India, the Companies Act

2013, which restricts the ability of

private and public companies to

conduct intercompany lending if they

share the same directors, makes

multi-entity pooling a challenge.

However, we have found that more

companies are exploring multi-bank

cash concentration to enhance their

domestic liquidity management

efficiency.

By that same token, countries like

Thailand had introduced recent

relaxation measures and treasury

incentives to facilitate fund flows into

Thailand. Extracting liquidity out of the

country for optimization at regional

or global levels is still a challenge, but

these are a welcome start.

Trend #3Liquidity transferability and convertibilityWe have observed a spectrum of

markets within Asia’s regulatory

landscape. There are the developed

and flexible domestic and cross-border

markets of Singapore, Hong Kong,

Japan, Australia, and New Zealand.

And there are the semi-regulated

markets such as Indonesia, Malaysia,

Philippines, and China, where the view

on transferability of their currency

and convertibility of the currency is

somewhat restrictive.

How transferable a currency is, and how

flexible it is in terms of convertibility,

creates opportunities for companies.

The good news is that more and more

markets are opening up, as in the case

of China and Thailand.


But some countries are still

viewed as trapped markets — these

would include India, Vietnam, and

Bangladesh, among others. If you

enter these markets, where you

need to have some self-funding

arrangements, it would make a lot of

sense to look at a domestic solution

in those countries and have a buffer

of regional pools. In a landscape like

Asia’s, a corporate should define

what the best liquidity optimization

strategy would be — whether it should

be a domestic solution to support the

business model in trapped markets or

a potential regional solution for the

fungible markets where liquidity is

easily transferable.

When it is a restricted or semi-

restricted market, companies can

keep some or all of the cash in the

country to meet their liquidity needs,

given the challenges associated

with cash forecasting or time zones.

Corporates can avoid potential loss

of value when they choose in-country

centralization options. On the

other hand, where companies have

the flexibility to comingle liquidity

among multiple entities and multiple

countries, then they can opt for

regional or global pools.

Looking aheadAs treasurers navigate an uncertain

landscape, the vision is for flexible

cash management systems, which at

least support their day-to-day cash

management operations. Treasurers

should also ask if the solutions they

have today will allow them to stretch

themselves, to take advantage of

opportunities that will enhance

liquidity use and achieve better yields

with the end objective of putting in

place an optimal liquidity structure.

They should also evaluate liquidity

in terms of operational and strategic

cash, and form a view on whether

strategic cash is needed in the short

run or whether it can be deployed

with high-yield instruments over the

medium or long term. This allows a

treasurer to enhance earnings from

excess liquidity. In day-to-day liquidity

requirements, what companies are

increasingly looking for is speed and

efficiency of liquidity solutions. This

makes it important to have the right

banking partner to provide the best

possible platform and give you very

quick service in the movement of your

cash, whether that movement is global,

regional or in-country.

In most cases, we find companies are

also increasingly looking at the depth

and breadth of products and solutions

that can support multiple currencies,

multiple entities, multiple residencies,

and multiple countries, with a view to

mobilizing their liquidity effectively.

In summary, treasurers should

keep three primary goals in mind

when navigating this ever-changing

landscape: operational efficiency, along

with the integration and optimization

of liquidity.

Treasurers should ask if the solutions they have today allow them to stretch themselves, to take advantage of opportunities that will enhance liquidity use and achieve better yield.



30


Citi Perspectives | 31Citi Perspectives | 31

An optimal experience has to package complex processes into one that is simple, intuitive, seamless and engaging.JP Jolly, Global Head, Channel and Enterprise Services, Treasury and Trade Solutions, Citi

INNOVATION SPOTLIGHT

Banks must carefully balance innovation and security as they work to overcome client onboarding pain points.

Taking onboarding into the 21st century

32



Sabine McIntosh Global Head, Account Services, Treasury and Trade Solutions, Citi

The identification process creates a

foundation of trust that is critical to

establishing a successful relationship. It

ensures that banks can only act in line

with defined regulatory and corporate

governance and on the instruction

of authorized individuals. Regulators

are cautious in approving changes

since there is significant importance

placed on client identification and the

document generation process, which

is critical to maintaining the integrity

of the financial system. This has an

impact on documentation issued by

banks, which operate as gatekeepers

to both regulatory and corporate client

identification requirements.

Once a client’s credentials have been

confirmed, opening a functional

account typically requires a significant

amount of documentation to be

mailed to clients, which must be

checked and signed, sometimes by

multiple signatories across the client

company opening the account, such as

treasurers, corporate secretaries, and/

or cash management directors. The

need for multiple signatures, often from

people who are not present in the same

country and/or who travel frequently,

can slow down the documentation

process. There is therefore an

opportunity to digitize and automate

the client-approval process.

Banks have embarked on a journey of

innovation, and are seeking to raise

standards and promote best practices.

Channel solutions must be secure.

Clients, banks, and regulators must be

aware of the potential risks of their

use. However, effectively implemented

technology solutions can potentially

enhance security by providing

electronic audit trails and could serve to

help increase the level of trust between

clients and banks, therefore resulting in

elevating the client experience.

Third-party utilities Know-your-customer (KYC) screening

is a cumbersome and administratively

taxing exercise for corporates and

banks. It involves due diligence,

document collection, and data entry.

In recent years, technology has transformed nearly every facet of our personal and business lives, improving convenience and control. Many clients would like to see similar innovations take hold in the financial services onboarding process, which consists of two principal elements: identification and the setting-up of services.

Rob Schlaff Market and Network Manager, Account Services, Treasury and Trade Solutions, Citi


However, as banks’ data requirements

and client bases overlap, digitized

KYC information — shared via third-

party data aggregators — can improve

convenience and efficiency in the

onboarding process for clients and

for banks.

Although SWIFT has such a utility in

pilot for financial institutions, industry

utilities for corporates are still in their

infancy. It is, however, anticipated that

this is set to change with ongoing

progress being made.

A variety of fintech companies,

consultancies, and data providers have

formed partnerships to create utilities

to collect or aggregate client KYC data.

While clients need to ensure the data

shared by the utility is accurate and

secure, banks retain responsibility for

KYC even when using a utility.

To date, regulators have not explicitly

supported KYC utilities: if they do,

utilities could rapidly gain momentum

creating convenient depositories

of corporate information, thereby

speeding up the KYC component of the

onboarding process.

Signature management technology Industry-wide initiatives are already

helping to make the bank account-

opening process quicker and easier.

One growing challenge for corporates

is managing global signatories on

their accounts. An industry utility

called SignatureNet enables financial

institutions to securely store, retrieve,

and manage their approved signatory

lists electronically, as an alternative

to inefficient, time-consuming, and

expensive traditional paper-based

signature books.

SignatureNet has been widely

adopted, especially by financial

institutions in Europe and the Middle

East, which have consequently

embraced it as a convenient tool

to improve operational efficiency.

Citi Account Services utilizes

SignatureNet to verify the signatures

of financial institution clients’

authorized signers as part of account

opening in the US and the UK.

Clients benefit from reduced paper

documentation as they no longer

need to provide physical signature

books when they open an account.

SignatureNet is also easily updated

and therefore more reliable while

offering increased security as there is

a clear audit trail.

DocuSign is a leading electronic

signature technology globally, which

facilitates electronic exchanges

of account-related contracts and

signed documents by providing an

authentication mechanism for digital

signatures. Adoption of DocuSign

by corporates is increasing and a

number of banks are seeking to take

advantage of its functionality.

An example of its use can be seen at

Citibank, N.A., Sydney Branch, where

it is now possible to accept electronic

signatures for Australian account-

opening and account-maintenance

documents from clients using

DocuSign. This means original paper

documents with wet signatures are

no longer required. However, some

anti-money-laundering, identification

certification, and banking mandate

documents will remain paper-based

because of local legal requirements.



Digitization of branches To accelerate the account-opening

process and the setting-up of services,

banks in a number of western

countries have made it easier for

clients to exchange digital information

with their banks via email or using

electronic bank account management

(eBAM) solutions. Client adoption of

digitized solutions/channels resulted

in a 55% improvement in the speed of

account opening at Citi in 2015.

In North America, Citi’s Electronic

Document Submission process now

allows most documents associated with

account opening and maintenance to

be scanned and sent via secure email

or uploaded into the eBAM module

of CitiDirect BE®, Citi’s electronic

banking platform. The scanned copies

replace their original counterparts and

no paper-copy follow-up is typically

required. This same process is now

being piloted in Western Europe.

Although some documents still

require a wet signature, the use of

an electronic copy of a document

means that there are no delays due

to mailing time. Moreover, executives

in different locations can easily add

their signatures to the document

without it being mailed around the

world, while at the same time providing

greater transparency into the process

as they retain electronic copies of all

documents that are sent.

Banks also have an opportunity to

create greater efficiencies in the

process by reusing existing data they

hold to pre-fill documentation on behalf

of clients where allowed by regulators.

Citi has already adopted this practice

in three markets and anticipates that

it will roll it out to more. Citi continues

to invest in new technologies to

further ease the burden on clients of

completing required documentation.

Working towards a simpler future Citi is committed to introducing

innovations to the onboarding process,

not only because they improve

convenience for clients, but because

— properly executed — they improve

security and the overall experience

clients have when opening and

maintaining their accounts. In this

journey of innovation, digitization

can provide a more secure and

transparent way of exchanging data,

which establishes the identity and

entitlements of individuals acting

on behalf of a company, improving

security across the client relationship

and reducing risk for the client and

their financial services providers.

With the emergence of third-party

utilities in the corporate onboarding

space, there are further efficiencies

to be gained. This is especially true

for companies that have relationships

with several banks across multiple

jurisdictions. Such utilities should help

to accelerate account opening and

maintenance processes in a safe and

regulated manner.

Corporates will continue to reap the

benefits of central depositories of

data held at utilities and of the wider

technological advancements in the

onboarding process. These will support

the sharing of real-time information

and increase operational efficiencies

by parting with traditional paper-based

practices. It seems somewhat certain

that in most countries many parts of

the onboarding process will continue

to evolve, improving convenience,

efficiency and — most importantly

— security for both clients and their

financial services providers.

Cybersecurity: the impact to the financial supply chain

36


It’s no longer enough for corporates and banks to simply react to cybersecurity risks — they must be proactive and anticipate what adversaries will do next.



Raj Shenoy Global Head, Digital Security, Treasury and Trade Solutions, Citi

The gap is widening between criminals’

ability to attack and corporates’

and governments’ ability to defend

themselves: it takes an average of 265

days to discover a network breach. To

close this gap, Citi shares information

that may be red flags of potential

breaches with clients, other banks, and

regulators, helping to prevent attacks

to their own systems in the future. By

partnering together, participants will

make the financial ecosystem stronger.

Understanding the motivation of attackersTo develop an effective security

strategy, it is necessary to understand

who attacks corporates, how they do

it, and why. There are five cyberthreat

actors — nation-states, cybercrime,

terrorism, hacktivism, and insiders —

each with different targets, methods,

and objectives.

Nation-state actors aim to steal

intellectual property and engage in

intelligence collection to advance

national interests. They are difficult

to defend against because of their

potentially significant resources and

advanced capabilities.

Cybercrime actors are mainly

motivated by financial gain, but can

cause damage when monetization

attempts fail. Their typical methods

include spear phishing and similar

social engineering techniques,

automated crime tools, fraud, botnet-

enabled distributed denial-of-service

attacks, and cyberextortion or

ransomware.

Terrorist actors are politically or

ideologically motivated and aim

to instill fear. Typical methods are

destructive cyberattacks, designed

Cybercrime, an attempt to access or damage a computer network or system to steal data or money, costs the global economy an estimated USD445 billion worldwide every year in direct damage and recovery costs. The number of cyberattacks is growing as companies digitize and the number of connections to the internet grows. By 2020, there will be an estimated 50 billion internet connections compared to 15 billion currently: each is a potential risk.


to destroy, degrade, disrupt, or deny

system operation, and cyber-enabled

functions to recruit, incite, train, plan,

and finance operations.

Hacktivists generally seek publicity to

further their geopolitical or social agenda

and usually operate disruptive campaigns

primarily via distributed denial-of-service

attacks and website defacements.

Insiders are potentially the greatest

threat to corporations. They may seek

financial gain or wish to cause harm for

a perceived wrong. Corporates need

to adopt a different strategy to detect

and defeat insiders given their inside

knowledge, which can more easily

enable them to steal data, conduct

fraud, or cause damage undetected.

Defeating this wide range of attackers,

who use a huge and evolving range of

methods, is challenging: corporates

have to get it right 100% of the time,

whereas criminals only need to get

it right once. However, in reality,

corporates have multiple opportunities

to successfully prevent or defeat

attacks: the reconnaissance phase, the

initial compromise, the establishment

of a foothold, the ability to escalate

privileges, and the ability to exfiltrate

data. Attackers must go through each

phase for a successful attack. That

gives corporates or banks the ability

to customize defenses for each stage,

depending on the type of actor.

At Citi, this customization of defenses

occurs at Citi Security Operations

Centers (SOCs), which house teams

that constantly monitor for intrusions

and which collect data on patterns of

activity (such as unsuccessful defensive

measures so that lessons can be

learned). Citi Cybersecurity Fusion

Centers (CSFCs) comprise multiple

cybersecurity teams from across Citi

to better attribute the threats, see

if such threats are affecting other

organizations, and determine what

lessons Citi might learn from them. The

overall goal is to stop the adversary at

the reconnaissance phase before they

can actually conduct their cyberattacks.

The impact on treasuryAttacks on the treasury can take a

number of forms. One of the most

common is treasurer impersonation,

which involves a combination of

technology and social engineering.

For example, a treasurer may update

their social network account with

an event they will be speaking at.

A hacker uses that site as an entry

point and gains access via an online

brute-force attack to guess the

treasurer’s login ID and password.

The hacker follows up by making

connections with the treasurer’s

associates (such as key suppliers or

employees) linked to that account

before sending a social networking

site message to all associates asking

them, for example, to click on a link

to the upcoming conference at which

the treasurer is speaking. These

users are then compromised by

malware when they click on the link.

The malware infection enables

the hacker to compromise the

credentials of the contacted parties’

email accounts and send directions

to the treasurer’s account payable


Business, both externally and internally, is increasingly dependent on electronic interaction and communications across a broad spectrum of partners inside and outside the company.


colleague to change vendor bank

details and transfer funds. Similar

attacks may use a telephone call to

request a payment (often claiming

that, for business reasons, such as an

M&A or regulations, the details of the

request must be kept secret).

The impact on the financial supply chainBusiness, both externally and

internally, is increasingly dependent

on electronic interaction and

communications across a broad

spectrum of partners inside and

outside the company. For example,

treasury interacts externally with

its banks, vendors that may be

performing outsourcing functions,

and suppliers; and internally with

functions such as technology or

human resources. It is critical to

ensure that end-to-end security is in

place across all of these interactions.

Key controls to safeguard the company

include but are not limited to:

• Data protection: information,

including customers’ or suppliers’

details, is as great a target for

criminals as transactions, as it can

be easily monetized.

• Third-party information-security

assessment: all vendors must

have appropriate controls. Regular

questionnaires, reviews, and audits

are helpful to access new partners’

security measures.

• Security incident management:

corporates need to have procedures

so people know what to do if

security is breached.

• Vulnerability assessment: controls

should be tested periodically, ideally

by a third party, using tools similar

to those used by hackers.

• Global ID administration: there

must be a prompt method to update,

modify, or delete access to systems

as employees’ roles change to avoid

vulnerabilities.

• Privileged user-managed access:

entitlements to sensitive internal and

external systems and networks must

be appropriate for each employee.

• Data: reports can be used to monitor

and identify potential problems as

early as possible to trigger security

incident-management processes.

Alternatively, data can be mined to

identify trends and best practices

relating to user access, for example.


Staff must be thoroughly screened and then trained on cyberthreats and potential fraud.

Security best practices Improving internal fraud prevention

and the reaction to such on discovery

depends on prevention and post-attack

mitigation within the financial center.

Prevention can be split into three

areas, each of which has distinct

best practices that enhance

security. Internal controls include

implementing electronic payments

for recurring check disbursements,

using additional levels of control

for new payee authentication, and

minimizing spare check stock and

maintaining tight control over

inventory. In addition, surprise audits

should be conducted and exception

items and account activity should be

reviewed on a daily basis.

Transaction controls are one of the

most important security areas for

corporates. Robust controls should

be in place for access to systems

and data, and locked beneficiary

templates (preformats) should be

used for payments to help prevent

unauthorized changes. Citi also

recommends the use of separate

deposit and disbursement accounts to

allow depository accounts to block all

check presentment.

Human resources risk mitigation

is also essential. Staff must be

thoroughly screened and then

trained on cyberthreats and potential

fraud. Those in financially sensitive

assignments must be periodically

rotated or have mandatory absence

periods so there is no single point

of potential failure and threats are

mitigated. Maker-checker segregation

of responsibilities should be enforced,

and this should be supported in

system workflows.

While prevention is clearly a priority,

it is important to have post-attack

mitigation and recovery plans in place

to quickly and effectively respond to

an incident. These include the issuing

of alerts and reminders so staff know

what to do in the event of an actual or

potential compromise. It should also

be clear whom to contact at the bank

should suspicious activity occur.

Furthermore, a playbook on how to

manage a security incident should be

in place with practice drills to insure

readiness. The faster an action is taken,

the more likely it is that funds will be

recovered or damage prevented.


While prevention is clearly a priority, it is important to have post-attack mitigation and recovery plans in place to quickly and effectively respond to an incident.




42

Commodity prices: the impact on trade finance


Kris Van Broekhoven Global Head, Trade Commodity Finance, Treasury and Trade Solutions, Citi

Commodity prices have dominated the

headlines over the past 18 months, with

the oil price more than halving from

its peak in 2014, and metals prices

also falling sharply. For commodity-

producing countries, price declines

have been a significant economic

shock, which has rippled into the

global economy. Price declines have

also created challenges for commodity

producers and raised concerns among

regulators and investors about banks’

exposure to commodities.

Commodity prices have always been

somewhat volatile and both oil and

metals have suffered significant

setbacks in the past. The current

malaise is different, however, because

of the speed of the oil price fall and the

simultaneous decline of oil and metals

prices: historically these commodities’

cycles were uncorrelated.

The economic slowdown in China,

a market that, until recently, had

been a major contributor to global

economic growth and trade in the

post-crisis period, helps to explain both

developments. Demand for commodities

in China, and to a lesser extent in other

leading emerging markets, has fallen

steeply as the country’s economic

growth has slowed. Given the mismatch

between demand and supply for many

commodities, prices have subsequently

come under pressure.

Surplus trade finance hits profitsFor the trade finance world, the fall in

commodity prices has had dramatic

repercussions. In 2014, before the

oil price collapsed, World Trade

Organization figures showed that

80-90% of world trade relied on the

provision of trade finance via banks

and insurance companies. In 2014, the

trade finance market was worth about

USD18 trillion a year, USD3 trillion of

which was related to oil. As the oil

price has halved so the value of oil

traded has also halved (even if the

quantities are identical).

For banks serving the trade finance

market, this rapid shrinking of the

The recent fall in commodity prices has had an impact on trade finance banks and generally reduced the availability of financing available to many companies in the sector. But while banks’ profits — and global growth — may be affected, concerns about banks’ exposure to commodities may be largely unwarranted.


market has been problematic. Even

before the recent commodity price

falls, there was intense competition in

trade finance, which resulted in tight

pricing. The steep falls in demand

over the past year have contributed

to an even greater trade finance

liquidity surplus, further intensifying

competition and driving prices down.

Lower volumes and lower revenues

may result in reduced profits for banks.

So far there have been no major bank

exits from trade finance, although

some banks have reorganized their

trade finance operations. Trade finance

has traditionally had a relatively high

percentage of fixed costs, such as

platforms and expertise. Indeed, costs

have increased as a result of tougher

regulations and increased compliance

requirements. For banks committed

to retaining a trade finance presence,

there is therefore little choice but to

compete on price to try to win business

and generate volume.

Financing availability differs for corporatesSurplus liquidity and increased

competition among trade finance

banks sound like an attractive

proposition for corporates seeking

financing. The largest commodity

producers in the world, classed as

tier-one clients, may benefit from

oversupply. Similarly, other global

producers that previously accessed

international debt capital markets

now find that, while bond investor

appetite has diminished, funding may

still be available from banks (as well as

commodity traders, which previously

were unable to sign up the biggest

producers for supply agreements).

However, for the majority of potential

borrowers, trade finance facilities

appear to be becoming harder to

access as banks are withdrawing

credit to help ensure their balance

sheets remain efficient.

Banks are unable to provide

trade finance to many commodity

companies primarily because of

commodity price falls. Given the

low price environment, the ability of

upstream producers of oil and metals

to generate cashflow is weaker. As a

result, their leverage has increased,

heightening their credit risk and

making banks less willing to lend to

them. These companies may have

few options apart from cutting costs

(including by asset sales) to lower

leverage and try to secure access

to credit.

The risks for global growthOne of the dangers for the global

economy is that the decline in the

availability of trade finance to many

commodity companies — partly as

a result of their worsening credit

quality due to commodity price falls,

but also as a result of more stringent

regulatory requirements — will reduce

growth. The main thrust of post-crisis

regulatory change has been to help

strengthen the financial system and

reduce systematic risk and is therefore

beneficial. However, there is potential

While the trade finance industry faces significant challenges as a result of the fall in commodity prices and increased regulatory requirements, it is important to recognize that trade finance still remains a viable business and a critical facilitator of global trade.



for unintended consequences from

new regulations if banks’ ability to

provide trade finance is reduced: global

trade and growth could be hampered.

Regulatory changes, such as Basel

III, and compliance initiatives, such

as know-your-customer (KYC), have

also had practical implications for the

provision of trade finance by banks.

For example, account opening and

the deal-approval process can now

take significantly longer because of

the checks that banks are obliged to

perform. Banks have also had to make

sizeable infrastructure investments

to assist in meeting regulatory

requirements. To date, fierce

competition may prevent these costs

from being passed on to clients, but it

is expected that repricing will occur at

some time in the future.

Grounds for optimismWhile the trade finance industry faces

significant challenges as a result

of the fall in commodity prices and

increased regulatory requirements, it

is important to recognize that trade

finance still remains a viable business

and a critical facilitator of global

trade. The bulk of trade finance is

short term, self-liquidating, and low

risk: commodity price falls do not

increase risk in banks’ commodity

trade finance portfolios. While

longer-dated financing is affected by

commodity price falls, banks usually

have risk mitigation embedded into

borrowing structures.

It is also important to note that while

falling oil prices have a negative

impact on commodity producers and

commodity-exporting countries, some

of which have suffered credit-rating

downgrades and had to reduce public

spending, the falls may be beneficial

for oil-importing regions, such as the

US and Europe, and can be expected

to stimulate economic growth.

Similarly, lower commodity prices may

provide a boost for companies that

use commodities as an input, as their

working capital needs and leverage fall.


46

Citi’s global network, combined with the local depth of our solutions and advisory services, innovation, and industry expertise, can play a vital role in helping treasurers take advantage of growing opportunities.Ebru Pakcan, Global Head, Payments and Receivables, Treasury and Trade Solutions, Citi



Jeffrey A Miller North America Sector Head, Energy, Power and Chemicals, Treasury and Trade Solutions, Citi

Kelvin Ang Americas Head, Treasury Advisory Group, Treasury and Trade Solutions, Citi

Ambrish Bansal North America Head, Market Management, Treasury and Trade Solutions, Citi

Corporate split or spinoff: finance in the hot seat Corporate restructuring activities continue unabated around the world. In 2015, there were more than 44,000 merger and acquisition (M&A) transactions totaling over USD4.5 trillion.1 A growing number of these restructuring transactions are resulting in corporate splits or spinoffs. During the past year, there were 95 spinoffs globally, totaling nearly USD260 billion in value, a record, and more than twice the total value in 2014 (USD127 billion).

48

A look at some key drivers of recent spinoff activity2

Improving operational efficiency

Focusing on core competencies

Paying down debt

Unlocking value by selling non-core assets

Prompting from shareholder activists

Keeping pace with competitors

Meeting antitrust requirements

Generating tax benefits

56% 40% 36%

24% 20% 16%

4% 4%


The reasons behind this record-

high activity vary by industry, but

several factors, such as improving

operational efficiency, focusing

on core competencies, and paying

down debt are the primary causes

(see chart below). And as this M&A

activity has increased, so too have

the challenges of restructuring these

global organizations.

Whether it be the office of the

chief financial officer, treasury,

procurement, accounts payables, or

accounts receivables, the finance

function is in the hot seat when it

comes to dealing with the implications

of restructuring throughout the

lifecycle of spinoff activities.

The important role of treasury in splits and spinoffs

In 2015, according to the Wall Street

Journal, spinoffs made up 53% of

corporate actions, followed by share

buybacks and joint ventures.3 When

it comes to restructuring a company,

spinoffs remain one of the most

popular ways, other than mergers and

acquisitions, to accomplish this goal.

As corporate activities become

more complex, it becomes clear that

planning and managing transaction

flows following a split or spinoff

falls firmly in the lap of treasury

professionals.


Overcoming the challenges of a split or spinoff When a split or spinoff occurs, the

challenge is to divide one efficient

treasury team into two, but this type

of “cloning” doesn’t always yield a

successful outcome. Simply replicating

the parent company’s treasury

structure in the new spinoff company

may bring with it inefficiencies in

the number of bank accounts, the

number of bank relationships, and the

way cash is concentrated. Since the

new company may involve different

lines of businesses where the sales

and the supply chain models are not

exactly the same, those inefficiencies

may become more conspicuous.

However, a well trained treasury

team should be sufficiently versatile

and knowledgeable to replicate

sound treasury policies and efficient

processes in the spun-off entity to

ensure successful operations.

An example of the challenges presented

by a spinoff can be found in the case

of the USD6 billion performance

chemicals business of DuPont, which

has a manufacturing and sales footprint

in more than 130 countries. Spun off

in July 2015, the new company, known

as Chemours, needed to survive and

thrive amid a cyclical cash-to-cash

cycle (inventory is built throughout the

year, but the majority of sales occurs

in Q3/4) in which cash that was tied up

in working capital had to be extracted

from the business and used as an

operational lifeline.

Beyond bank rationalization,

cloning presents additional treasury

challenges that can affect cash

forecasting, especially if there is

commingling of the sales or the

supply chain cashflows, foreign

exchange management processes,

and connectivity issues between ERP

systems and treasury workstations

with banking platforms. To overcome

these, treasury should engage its core

banking partners early to ensure a

seamless separation of the payments

and receivables flowing through the

correct bank accounts and avoid

reconciliation issues that can grow

exponentially if not resolved quickly.

Finding the right banking partner is key Companies that have been spun off are

under pressure to be up and running

quickly. They typically don’t have the

luxury of an extensive infrastructure

setup. That’s why treasury should

be looking for a banking partner

with proven large-scale corporate

restructuring experience to provide

support and advisory services. In many

cases, the bank will typically expand

its scope to offer service that goes

beyond business as usual. For this

reason, it is important to fully access

the bank’s liquidity management and

payments and receivables capabilities.

Treasury should be comfortable with

the bank’s ability to play a critical

role during the planning stages of a

spinoff and during the operational

setup, thereby providing treasury with

greater capacity.

Various regional and local regulations,

especially in emerging markets, may

prove difficult to navigate, which is

why selecting a bank with an extensive

global footprint is important.

1 From https://imaa-institute.org/statistics-mergers-acquisitions/, last accessed on 23 August 2016. 2 Source: Mergermarket and RR Donnelley. 3 From http://blogs.wsj.com/moneybeat/2016/05/17/company-spinoffs-look-like-a-win-win-deal/, last accessed on 23 August, 2016.

This makes a difference from a

centralization perspective and

because it can help avoid the need

to coordinate multiple banks and the

inefficiencies associated with a less

integrated overall solution.

In the case of Chemours, choosing

the ideal banking partner was critical

to achieving its strategic goals.

Citi was credited with helping the

company build a dynamic, holistic

cash management office, with a

near-real-time digital treasury.

Analytic insights that have resulted

from integrated KPI dashboards give

Chemours greater visibility into its

working capital positions across all

business units, helping decision-

making now and into the future.

Q. In terms of people, policies, processes and platforms, which ones should we be concerned with in times of a spinoff?

Q. Who should be our partners to help us be effective in managing a spinoff?

Q. What can we do to optimize our liquidity structure and improve working capital?

Q. While “cloning” or “lifting and shifting” to replicate treasury operations in a spinoff seems to be an easy decision, how else can we be more effective and efficient?

Q. When should we start to engage our banking partners?


Questions to ask banks:

Is cash still king?

52


A while back I came across an 1844 United States penny. It was solid copper and, at 11 grams, weighed more than three times today’s copper-plated zinc models. Imagine what it must have been like to carry around a pocketful of coins weighing 11 grams each.



Ron Tauscher Global Senior Product Manager, Receivables, Treasury and Trade Solutions, Citi

Drivers of cashless transactionsWhile faster in some countries than

in others, the move away from cash is

inevitable, and has been accelerating

in recent years. To understand why,

consider the forces propelling it.

First, cash is costly. Its cost, among

other things, puts a financial burden

on national economies. Currency has

to be manufactured, stored, moved,

managed, and insured, with significant

costs associated with each step.

According to recent studies by Tufts

University’s Fletcher School in the US

and Germany’s Steinbeis University

Research Center for Financial Services,

the cost of cash around the world

accounts for 1.5% of global GDP.2

Second, cash is risky. Cash is not only

costly to produce, move, and store, it is

exceedingly difficult to protect.

Unlike most cashless transactions

conducted by card, mobile phone, or

e-commerce, cash has no memory. As a

bearer-negotiated instrument, it bears

little data beyond the present holder of

the transaction. As a consequence, the

use of cash by companies small and large

has been subject to growing scrutiny.

Banking regulators worldwide continue to

press for strong anti-money-laundering

(AML) and know-your-customer (KYC)

procedures among financial institutions.

There is good reason for this. The use

of cash, while legal, can cause suspicion

owing to its status as a bearer-negotiable

instrument. The digital infrastructure

around e-commerce transactions, on the

other hand, deters money laundering.

Plus, the costs associated with electronic

payments are a fraction of those

associated with cash payments.

Today, 172 years after that coin went into circulation, cash continues to weigh down the pace and efficiency of worldwide commerce. In fact, cash still accounts for approximately 85% of consumer transactions globally.1 Cash remains particularly popular for low-to-moderate-value retail purchases and among the unbanked and underbanked, who in some cases, use cash purely out of necessity. Nevertheless, consumers and businesses today have more access to alternative payment methods than ever before and their preferences are changing.


Third, in many developed and rapidly developing parts

of the world, cash payments to businesses are becoming

increasingly inefficient. Studies by Visa show that

Americans, for instance, are two times more likely to carry

a mobile phone than cash. If you’re an American between

18 and 34, you are four times more likely.3

As the journey to cashless payment methods grows on a

global scale, some interesting oddities have emerged.

Thanks to Kenya’s M-Pesa mobile-money system, paying

for a taxi ride using your mobile phone is now as easy in

Nairobi as it is in New York. Nearly a decade after its launch

in 2007, the mobile payments platform has transformed

economic interaction in Kenya. In 2013, 43% of the

country’s GDP flowed through M-Pesa.4

M-Pesa’s success in Kenya illustrates how providers can

impact adoption of mobile money services around the world.

According to the Global Mobile Systems Association (GMSA),

in 2014 alone, more than 250 mobile money services were

operating across 89 countries. That figure includes more

than 60% of the world’s emerging economies.

Changing preferences and behaviorsAs the M-Pesa case illustrates, technology

developments and the security desires

of businesses and consumers alike are

shifting payment behaviors.

The dominance of cash is fading as

alternatives to cash payments continue

to grow rapidly in both developed and

developing markets. The most notable

of these include payments via mobile

devices, e-wallets, direct debits, and

bank transfers.

Businesses looking to migrate from

cash to electronic receivables should

consult experienced service providers

for assistance with cash-to-cashless

initiatives and determine the “must

haves” for their e-commerce solution.

Here are some things to consider:

1. KEEP IT SIMPLEWhile payment technologies and the

tools to initiate transactions are evolving,

electronic payments must remain simple

and accessible for consumers and

flexible for merchants. When evaluating

electronic payments providers, evaluate:

• The solutions they offer today, and

their plans for tomorrow.

• Plus the marketing tools they

deploy to help overcome barriers

to electronic payment adoption.

2. KEEP IT SECURESecurity is paramount. Any e-commerce

solution that is adopted must be agile

and resistant to a wide and growing

array of threats. No one wants to

experience identity theft or the

immense energy required to clear the



name and credit status of a payer. Trust,

confidence, and provider experience are

essential for any e-receivables system.

Therefore, it is critical to evaluate the

e-commerce and mobile payments

security initiatives that the provider

deploys today and plans to deploy

tomorrow, in addition to its anti-

money-laundering safeguards.

3. BUILD IT RIGHTEnsure that the e-payment

solutions being considered are

robust enough to handle huge

transaction loads. What’s more, the

processing technology must ensure

that transactions are fast, efficient,

and accurate. Every transaction,

regardless of size, should be

traceable and retrievable.

Businesses also need to consider

the region and country of their

payers. Offering a limited but locally

desirable payment method might

be the best solution for sending

the message, for example, that a

business is in touch with payers’

payment challenges and wants the

payment process to be accessible

and simple.

Ask providers about:

• Their track record of successful

e-receivables systems

implementations.

• The scope and strength of their

local, regional, and global reach.

• And their transaction reporting

offerings and capabilities.

ConclusionCash as a payment instrument is in decline, and it has some

time to go before it will be insignificant. What is of increasing

significance, however, is the expense to monitor, manage, and

protect cash as a payment instrument.

Regional demographics and payment behaviors, along with

easy access to e-commerce tools, are driving e-commerce

solutions from emerging to ordinary. While moving at different

speeds in different developed and developing markets,

e-payments are quickly taking flight on a global scale.

Electronic payment alternatives, which are significantly

cheaper to process than cash or checks, are becoming

virtually ubiquitous.

Having an experienced banking partner, who can address

specific business and marketplace needs, is key to making the

right choices today for a more successful cashless receivables

portfolio tomorrow. The time to prepare for the increasing

adoption of electronic payments transactions is now.

1 Measuring Progress Toward a Cashless Society, MasterCard Advisors, accessible at http://www.mastercardadvisors.com/_assets/pdf/MasterCardAdvisors-CashlessSociety.pdf, last accessed on 16 August 2016. 2 Source: See MasterCard Advisors. 3 Source: “Cash is Trash: The Future of Mobile Payment,” September 2014, available at http://www.forbes.com/sites/techonomy/2014/01/23/cash-is-trash-the-future-of-mobile-payment/#62ec2f062e1c, last accessed on 16 August 2016. 4 M-Pesa and the Rise of the Global Mobile Money Market,” 12 August 2015, available at http://www.forbes.com/sites/danielrunde/2015/08/12/m-pesa-and-the-rise-of-the-global-mobile-money-market/#1aae87c023f5, last accessed on 16 August 2016.

Global tax initiatives: the evolving regulatory environment

56

GLOBAL TRENDS



Dan Stern Global Head, Governance and Risk, Liquidity Management Services,Treasury and Trade Solutions, Citi

Beginning with the Foreign Account Tax Compliance Act (FATCA), governments around the world have been working towards automatic exchange of information between tax authorities in an effort to curb tax evasion and promote transparency. Since 2010, more than 100 countries have made changes to their rules on information reporting, with more on the horizon, which is putting increased pressure on financial intermediaries to take a more active approach to ensure they are prepared to comply.

Unfortunately, as global, regional,

and local banks enhance their due

diligence procedures to meet these

new requirements, corporates

find themselves facing differing

documentation standards due to

differences in local law requirements.

This may result in the collection of

multiple tax forms from a single entity

to satisfy various tax initiatives.

The three tax initiatives that are

affecting corporates and banks

today are: the Foreign Account Tax

Compliance Act (FATCA); the Common

Reporting Standard (CRS), and the

United Kingdom Crown Dependencies

and Overseas Territories (UK CDOT)

which will be replaced with CRS. The

balance of this article will give an

overview of these regulations with the

goal of helping corporates understand

how banks are approaching them, and

what corporates will be required to do

to stay in compliance.

The implications of information reporting and tax-withholding requirements FATCA, which is US tax legislation, is

aimed at preventing or detecting tax

evasion by US taxpayers who maintain

financial accounts outside the US or

who invest offshore through non-

US entities. FATCA requires that for

accounts opened prior to January 1,

2015 banks must search for indicators

of US status. Both US financial

institutions and participating non-US

financial institutions must request


documentation to establish the FATCA

status of all account holders.

Corporate accounts opened on or after

January 1, 2015 require the collection

of documentation that establishes

FATCA status period. In addition,

financial institutions must identify any

US indicia that would require further

documentation. Banks must validate

tax documentation collected against

all current account information.

They must also monitor all accounts

for changes in circumstances that

might affect the FATCA status of the

account holder and collect additional

documentation, as required.

In addition, FATCA requires that

financial institutions holding

US accounts or undocumented

accounts outside the US report

certain information regarding these

accounts directly to the Internal

Revenue Service (IRS) or to local tax

authorities for exchange with the US.

Beginning January 2017, US source

income subject to withholding is

expanded to include bank deposit

interest paid by a foreign branch of

a US bank. Therefore, if a corporate is

not properly documented, interest

paid by a branch of a US bank will be

subject to US withholding tax.

To determine the reporting obligations

for an account opened prior to

January 1, 2015 (pre-existing account),

banks were obligated to perform

outreach by June 30, 2016, and many

continue the process of working with

clients around the world to request

necessary information. Corporates can

be prepared by taking steps, such as:

• Identifying legal entities that do

business with all banks.

• Contacting a trusted banking

partner to help better understand

the specific requirements.

• Engaging your tax department to

explain the regulations and the need to

prepare tax forms that will be required.

• Taking advantage of online tools

designed to help navigate the

compliance process. Citi offers tools

and simplified instructions to help

clients complete forms and avoid

common errors. This is particularly

helpful in avoiding one of the most

frequent: using the wrong tax

forms. (See: https://www.citi.com/

tts/sa/taxinitiatives/fatca.html.)

Meeting CRS and UK CDOT requirements Similar to FATCA, UK CDOT requires

financial institutions in the U.K. Crown

Dependencies to identify UK residents;

UK CDOT applies to new accounts

opened on or after July 1, 2014. UK

CDOT will be replaced with CRS.

CRS, which went into effect on

January 1, 2016 for approximately

50 early adopting jurisdictions,

expands the automatic exchange of

information to require the collection

of tax residency information and

exchange such information with

those participating jurisdictions. This

regulation requires the collection

of documentation to establish the

country of incorporation for new

accounts and information for tax

residency for such accounts.


In addition, similar to FATCA, financial

institutions need to make sure there

is no inconsistent tax indicia in its file

regarding a taxpayer’s claim of tax

residency. Also, there is a requirement

to solicit CRS documentation for pre-

existing accounts.

Under CRS, corporates opening cash

accounts in participating markets, or

in time deposit, minimum maturity

time deposit (MMTD), or similar

interest-bearing instruments, which are

considered financial accounts, will have

to provide a CRS self-certification form.

Financial institutions doing business

in CRS participating jurisdictions will

be required to report certain account

information of their clients to all

participating CRS jurisdictions in 2017.

The upshot is that corporates need to

be aware of these requirements and

make sure they are in compliance.

Since 2014, more than 100 countries have made changes to their rules on information reporting, with more on the horizon.

Meanwhile, Citi is working hard to

reduce the volume of documentation

that corporates are required to provide

to stay in compliance with UK CDOT

and CRS by leveraging overlapping

information whenever possible.

Staying on top of the changing tax landscape Staying on top of the changing tax

compliance landscape is no easy task.

Local governments are continuing

to issue new directives. Over 100

jurisdictions have committed to

adopting CRS between 2016 and 2019

and we are awaiting local guidance

from many of these jurisdictions.

Citi is diligently working to understand

the implications of these initiatives,

while keeping the client experience in

mind. We are always looking for ways

to streamline the process.

© 2016 Citibank, N.A. All rights reserved. Citi and Arc Design is a registered service mark of Citigroup Inc.

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Citi PERSPECTIVES

Citi Perspectives | Autumn 2016

04 Perspectives for 2017: creating optionalityA look ahead to 2017 as treasury teams plan for new challenges

14 Brexit: the effect on corporatesAn assessment on the potential impact on different corporate sectors

Cybersecurity: the impact to the financial supply chainAn overview of the effect of cybercrime on the business and banking community

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