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Søren Kyhl, executive vice president and global head of transaction banking, Danske Bank

Capital Optimization In A Low-Interest-Rate Environment: Søren Kyhl, Danske Bank

Global Finance: What issues are keeping European treasurers up at night?

Søren Kyhl: Capital optimization, risk mitigation and liquidity management are among the top priorities right now. Many corporates have seen their top lines stagnate since the financial crisis. In order to keep the bottom line growing and generate returns to shareholders, most corporates have had a strong focus on efficiency and cost. There’s a lot of dialogue about payment factories and billing factories and simplifying processes.

The low-interest-rate environment, which may continue for a while, will cause treasurers to focus more on how to generate a decent return on their excess liquidity. And because the increased capital requirements (of Basel III) make it more expensive to lend through banks, we’re seeing growth in the number of corporates taking direct access to the capital markets and doing bond issues.

GF: What do most treasurers think of the ECB’s recent asset purchase plan?

Kyhl: Many companies have used the economic and financial crises to optimize their debt positions, while at the same time optimizing inventories and stock [levels] to free up working capital. The ECB initiative is a signal to take forward investment plans, which may have been kept in the CFO’s desk, and consider growing business and markets. Interest rates can’t go down any more.

GF: Similarly, what do most treasurers say about the potential for a Capital Markets Union?

Kyhl: To many multinational companies, the variety of currencies and jurisdictions across Europe make it difficult to navigate. The standardization will help create a stable, standardized banking environment. Most corporates, we believe, will welcome it.

GF: Of the hot spots around the globe, which seem to be of most concern to European treasurers? 

Kyhl: The Russian crisis and the continued unrest in the MENA [Middle East/ North Africa] region continue to be on the minds of European treasurers.

The low-growth environment in Europe also sparks concerns. Some talk about the Japanese case and wonder whether we’ll also have 10 years of low growth. It’s also forcing corporates to consider new markets. Those of interest are the bigger Asian economies where high growth remains; Africa, where several countries are showing good growth; and maybe also the US, where the economy is picking up.

GF: How is the role of the corporate treasurer changing?

Kyhl: Agility, change management, IT, internal communication, risk management and shared KPIs [key performance indicators] are all among the competencies of growing importance for corporate treasurers. And this, in turn, creates a growing need for more automation, simplification and strategic counsel from their financial partners.  

— Karen Kroll

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