October 2017

Treasury and Trade Solutions

Going Global – Business without Borders Enabling International Growth

Simona Anghel

Romania Sales Head

Treasury and Trade Solutions, Citi

The Pursuit of Growth Treasury Challenges Emerging market companies are increasingly expanding their businesses beyond home borders into international markets.

These companies face numerous challenges and risks in the pursuit of global growth.

Fragmented banking structures across multiple banks

and countries

Managing multiple different currencies

High FX costs

Cash forecasting challenges

Difficulty funding local businesses

Inefficient repatriation of cash

Negative rate currencies and trapped cash markets

Post M&A integration challenges

Growth Strategies Key Treasury Challenges

Balancing

Growth and

Risks

Growing

domestic

market share

Mergers and

Acquisitions

eCommerce

growth

Partnerships

and Joint

Ventures

Access to

international

markets

1

AUD USD

Australia

BRL

Brazil

France

EUR USD Germany

EUR USD

Hong Kong

HKD USD INR

India

EUR

Italy

JPY

Japan

Sweden

EUR SEK

EUR

United Kingdom

GBP USD CAD

Canada

USD

USA

USD

USD

Typical Cash Management Structure

As organisations expand internationally, they frequently maintain fragmented structures across multiple banks & countries.

Typical Cash Management Structures & Challenges

Key Pain Points

High operating costs – multiple banks,

platforms & processes

Fragmented liquidity & negative rate ccys

Difficulty funding local businesses

Inefficient repatriation of cash

Forecasting challenges

High FX costs

Lifting fees on cross border payments

Reconciliation challenges Transactional payments and collections

2

The Citi Solution – Value Proposition Citi’s solution minimises your overhead costs, reduces FX exposure and optimises working capital to provide you with a

direct competitive advantage and a scalable platform for your growth agenda

Optimise Liquidity Streamline Operations Improve EBITDA

• Consolidate liquidity across

Citi and 3rd party banks, with

automated sweeps

• Single view of global cash

positions

• Optimise use of cash across

currencies including

automated repatriation

• Bank & Account

Rationalization leveraging

Citi’s global network

• Payments to 190 countries in

over 130 currencies with FX

transparency

• Full Value Transfers to

beneficiaries

• Earnings Credits to offset bank

fees and reduce expenses

• Payer ID accounts to

accelerate cash application &

improve DSO

• Virtual Card Accounts for

greater security & control and

extended payment terms

• Technology integration and workflow

automation solutions

• Dashboard tools enable you to view your

positions & get actionable analytics

3

Liquidity Optimisation

Case Study

Managing Multiple Currencies across Markets

Client Characteristics and

Pain Points

Invoicing in different currencies

Multiple banks and

multiple currencies

Counterparty risk concerns

Fragmented balances

Negative rates

Overdraft costs

Inefficient and manual

cash repatriation

High FX costs and lifting fees for

cross border payments Romania

RON

3MM

UK

USD

2MM

Bulgaria

BGN

1MM

Slovakia

EUR

(1)MM

US

USD

2MM

Germany

EUR

2MM

Payments and Collections

As organisations expand internationally, they frequently maintain fragmented structures across multiple banks

and countries.

4

Solution: Global Cash Concentration via Physical Sweeps

1. Open in-country accounts with

Citi branches for domestic

payments and collections

2. Open concentration accounts to

consolidate and repatriate liquidity

3. Set up automated end of day sweeps

between country and header

accounts – single or multi entity

4. Automated FX sweep for balances in

non-core currencies

5. Reduce levels of negative yield

currencies – use EUR to fund payments

in 100+ currencies

6. Single global platform for visibility and

workflow automation

Automated FX Sweep (Intraday) Automated End of Day Sweep

Concentration

Centre

Romania

In-country

Accounts Pre: USD 2MM

Post: 0MM

UK

Pre: USD 2MM

Post: 0MM

USA

Pre: USD 0.5

Post: USD 0

Bulgaria

Pre: EUR -1MM

Post: 0MM

Slovakia

Pre: EUR 2MM

Post: 0MM

Germany

Cross

Currency

Payments

Globally

Pre: BGN 1

Post: BGN 0

Bulgaria

Extended transactional window and automated cash repatriation.

6

FX

1

3

EUR

1MM

USD

4.5MM

RON

3MM

2

4

5

FX

5

Solution – Financial and Operational Benefits

Item

Average Bal

(USD Equiv.) Interest Rate Interest/Cost

USD Balances 4,000,000 0% $0

EUR Balances 2,000,000 (0.40)% $(8,000)

EUR Overdrafts (1,000,000) (1.00)% $(10,000)

BGN Balances 1,000,000 0% $0

Transactional Costs across 6 different banks $(30,000)

Total Treasury Economics $(48,000)

Current State Proposed Structure with Citi

Balances scattered over multiple bank accounts held

at different banks

Client Challenges

High operating cost

Fragmented liquidity in multiple banks

Low yield and overdraft charges

Forecasting challenges

Counterparty risk concerns

Benefits of Citi Solution

Cost Savings

Elimination of unnecessary overdrafts

Improved returns

Funding of local businesses automatically

Extended transactional window

Item

Average Bal

(USD Equiv.) Interest Rate Interest/Cost

USD Balances 4,500,000 0.20% $9,000

EUR Balances 1,000,000 (0.40)% $(4,000)

EUR Overdrafts 0 $0

BGN Balances 0 $0

Transactional Costs (e-banking, Payments,

FX, etc.) $(30,000)

Total Treasury Economics $(25,000)

Cost reduction from lower e-banking maintenance costs

and operational efficiencies from end to end automation

6

The proposed structure implies the centralization of funds at the level of the US entity. Non-resident accounts will be

opened with Citi Romania and the funds collected from all subsidiaries through TBA sweeps will be transferred to these

accounts and further exchanged into USD using the Auto-FX solution.

CASE STUDY

RON

RON Account

EUR

EUR Account

GBP

GBP Account

JPY

JPY Account

Citi’s Customer Non-Resident accounts

(USD)

Citi’s Customer Non-Resident accounts (RON, EUR, GBP, JPY)

USD

USD Account

RON, EUR, GBP, JPY

Auto FX Solution

SGD Account

Manual FX

Singapore – we cannot preform cash pooling on the SGD

currency. Manual FX should be performed by the customer,

from SGD to USD.

Customer Ro

Customer UK

Customer US

Customer Japan

Customer Singapore

Customer Ro Customer Ro

Customer UK

Customer Ro

Customer UK

Customer Japan

7

Collection & Payment

Global innovative solutions

Accelerate Cash Application – Payer ID Accounts For organisations facing challenges to reconcile incoming payments to open debtor entries in a fast and efficient manner,

Citi offers Payer Identification Accounts which are virtual account numbers that can be assigned to individual payers to

make payments. Payments to these accounts are posted to a single physical collections account.

• Account number(s) assigned to the collecting client

as a means of identification / visibility

• A Payer ID Account is visible as if it is a Real

Account Number

• Payer ID accounts map to, and actual funds flow to,

a single Real account owned by a single entity

What are Payer ID Accounts?

1

2

3

Unique Payer ID Accounts:

Range of account numbers

• Usable in the market (payer, payer

bank, clearing etc.)

• Identification / mapping to real

account

Client reporting / visibility:

• Transactions at Virtual Account level

• Funds aggregated at real account

level

1000123456

7001234567

7001234568

7001234569

7001234560

7001234561

Real account –

Entity A

• Identification: Each payer identification account number will map into the transaction reference field which is reported on the

statements of the physical account. For Romania, a next day reconciliation file is provided.

• Efficiency/ Administration: Payer ID accounts are faster and easier to set up and require no account level documentation

• Cash Management: Actual funds are consolidated into single real account

• Cost Efficiencies: Minimizes the number of collection accounts required by the Citi client (collector)

Benefits of Payer ID Accounts

RO 12 CITI 1234 1234 1234 1234

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Citi Virtual Card Accounts Overview

Clients can gain financial benefits, process improvements, and greater security & control by leveraging Citi Virtual Card

Accounts (VCA) for supplier payments.

Virtual Card Numbers (VCNs)

Increased Transaction-Level Control

Enhanced Client-

Supplied Data

Three Interface Options

Virtual Card Numbers (VCNs)

Unique, non-plastic account numbers used for secure purchasing

Secure VCN can be delivered via encrypted email to suppliers

Increased Transaction-Level Control

Define authorization controls for each VCN:

Number of transactions (single- or multi- use)

Transaction amount limit (exact, maximum)

Validity Period & more

Enhanced Client-Supplied Data

Capture client-specified data elements with each VCN for enriched data analysis, allocation, and reconciliation

Three Interface Options

Request website with customizable approval workflows

Batch File Interface

Real-time API

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Virtual Card Accounts Technology

VCN requests can be completed using one of three interfaces: Web, Batch, or API.

WEB

BATCH

A web-based application that allows a user to login and request a virtual card

number (VCN). Additionally, approval flows can be configured to have a

requestor and approver review prior to receiving a card account

The company can request a batch of virtual card numbers for payments via file

transfer. Web portal upload returns the payments file with VCNs

Web The company

Request VCN

Batch

The company

Uploads File

API Leverage the company’s system using a real-time web service to generate VCN’s

from its eProcurement system or any other payment system

API The company

System

Integration

Description Interface

10

Global Banking Connectivity

Standardised Global Platforms - Global Banking Connectivity

CitiConnect for SWIFT

Full payment and reporting

capabilities globally

Centralised hub: Connection to Citi

via one local branch BIC via FIN

and FileAct for global access

Consistent SWIFT messages for true STP

Reduce SWIFT costs up to 3x by eliminating cross

border traffic fees

CitiConnect for Files

Single channel for global transmission and

receipt of files and formats such as ISO20022

XML

Host-to-Host gateway for integration

with TMS/ERP

Connects with treasury centres and

links with Citi’s Integrated Payment

Services for global payment

processing

CitiConnect API

Cost effective, real time

access to Treasury Services

via API to deliver a straight

through processing solution

Access Treasury Services directly

from your application of choice

Collaborate through an API ecosystem

with ERP and TMS vendors

CitiDirect BE

Global web-based electronic banking tool supports transaction

services in a real-time

environment

Payments and collections in over 90

countries, supports 26 languages

Manual (or scheduled) file

import/export available for

many file formats

CitiConnect for

Files

CitiConnect for SWIFT

CitiConnect API

CitiDirect BE

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CitiConnect API

The Challenge:

Our clients are in need of fully automated solutions to process transactions directly from their own

Treasury Workstation (TWS) and Enterprise Resource Planning (ERP) platforms to their banking

partners, without having to rely on banking portals.

The solution:

CitiConnect API provides cost effective, real time access to Treasury Services that deliver a straight

through processing solution for our clients.

Value for our clients:

Flexibility and choice to access

Treasury Services directly from their

application of choice

Accelerate implementations by

simplifying integration and reducing

onboarding time

Payment

Initiation

Transaction

Status

Inquiry

Balance

Inquiry

Account

Statement

Request

Account

Statement

Download

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What is an API?

Business Assets Exposable Citi TTS Data and

Services

Citi API Platform APIs providing access to

Business Assets

Developers Use Web APIs to

create apps

Business Apps Use services and data

through Web APIs

End Users Use Business Apps

Application Programming Interface (API) is the primary entry point for business whether it is

called from a company’s own applications (Internal API) or by client or business partner. API

enables nimble interactions in digital ecosystems.

Source: IBM (adopted by Rene Schuurman

13

WRAP-UP

Wrap Up: Best Market Practices Cash Management Solutions

Integration Automation

Risk Management Flexibility

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Citi Contacts

Simona Anghel

Romania Sales Head

Treasury and Trade Solutions

+40 21 203 67 31

Simona.anghel@citi.com

Alexandru Toma

FX Corporate Dealer

Markets Romania

+40 21 203 55 20

Alexandru.toma@citi.com

Aidar Kaliev

Commercial Subsidiaries Group Head, US

Commercial Bank

+1 (212) 559-0996

aidar1.kaliev@citi.com

Mihai Cocheci

Commercial Subsidiaries Group Head, Romania

Commercial Bank

+40 21 203 52 65

mihai.laurentiu.cocheci@citi.com

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