金融脱媒研究文献综述及外文文献资料Word格式文档下载.docx

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MultinationalCashManagementinEuropeTowardsCentralisationandDisintermediation:

ThePhilipsCase

Westerman,W;

HenkE

Abstract

Liberalisationandderegulationoffinancialmarkets,lowercurrencyvolatilityandtheintroductionoftheeurohavereducedtransactionandbankruptcycostsformultinationalsinEurope.InternalEuropeantransfersofcashhavebecomeeasierandcheaper.Thishasenabledthecentralisationofcashmanagementactivities.Thecentralisationatheadquartersofmultinationalenterpriseshasalsoopenedtheroadtofinancialdisintermediation.ThesetrendsmayhavehelpedtocreateconglomeratebenefitsinEurope.ThecaseofthecashmanagementattheNetherlands-basedRoyalPhilipsElectronicsisusedtoillustratethesetendencies.

Keywords:

liberalisation,deregulation,euro,EuropeanUnion,multinationals,cashmanagement,centralisation,disintermediation,conglomeratediscounts

1.Introduction

Asmanyfinancialmarketswerefreedaboutadecadeago,globalisationofcashmanagementbecamefeasible[Sandford,1994;

Hollandet.al.,1994;

ValenzuelaandEveges,1995],althoughmanycorporatetreasuriesinEuropestilloptedfordifferentapproachespercountry.RecentEuropeanlegislation,however,increasedtheefficiencyofcrossborderfinancialmarkets.ThesedevelopmentsaffectedcashmanagementofmultinationalfirmsinEurope.Especiallyintheeurozone2centralisationofcashmanagementisfeasiblenowadays.In-housebanksatEuropeancorporateheadquartersthathandlefinancialtransactionsarebecomingmorecommon,whiletheresultingdisintermediationofcashmanagementreducesthelevelofcashheldwithinmultinationalsaswellasthecostsofcashmanagement.

Inthisarticlewediscusstheconsequencesofthechangingshort-termfinancialmarketcircumstancesfornon-financialmultinationals.InparticularwewillconcentrateontheconsequencesforcashmanagementwithEuropeanmultinationals,thoughnon-Europeanmultinationalsmayalsobenefit,dependingonthedesignoftheirglobalcashmanagementsystems.WeillustratethetrendswiththecaseofRoyalPhilipsElectronics（Philips）.HavingbeenfoundedinTheNetherlandsin1891,thehigh-volumeelectronicsfirmhasvastEuropeanoperations,whilealsobeingactiveonallcontinents.Philipsconsistsoffiveproductdivisionsthatemployabout160,000people.Thecorporateturnoverin2002waseuro32,305million,whileassetsattheendof2002amountedtoeuro32.289million.

WechosePhilipsasanexampleofafirmwithaprogressiveglobalcashmanagementsystem.In-depthaccesstothefirm'

sEuropeancashmanagementsystemwasenabledbystudiesinco-operationwithPhilips'

officersovertheyears.Articlesinnewspapersandthelike,externalpublicationsofthefirm,internaldocumentsofvariouskindsandprofessionalarticlesonPhilips'

cashmanagementsystemhelpedtogetagraspoftheobjectofstudy.Inanexplorativeresearchstudysuchasthisone,unstructuredcontactshelptoprovideinsights.Especiallyon-sitevisitsinApril2002andOctober2003,bothfollowedbyregulardirectandindirectcontactswithvariouscorporatetreasuryofficers,providedmuchoftheinformationforthisstudy.However,achecklistwasusedtoassemblemissingdataviatelephoneande-mail.

Insection2wedescribethebackgroundofliberalisationandderegulationoffinancialmarkets,theintroductionoftheeuroandthecashmanagementsystemofPhilips.Insection3wedealwithEuropeancashmanagementcentralisation.Itsconsequencesarelowerlevelsofcash,lowercostsandmorecentralcontrol.Moreover,multinationalslikePhilipsmayhandlealargerpartofcorporatefinancing,resultingindisintermediation.Insection4wediscussadditionaladvantagesforconglomeratessuchasPhilips.Finally,section5providesourconclusionsandrecommendationsinthelightofthisstudy.

2.Background

TheEuropeanUnion3（EU）hasissuedmanydirectivesonshort-termfinancialmarkets.Inparticular,the"

Europe1992"

programexpressedasenseoftheurgentneedforEuropetorespondtothemoveintheUnitedStatestowardsfreefinancialmarkets.Sincethen,intracompanydividendtransfersandroyaltypaymentshavebeentax-freeintheEUandbilateraltaxtreatieshaveloweredwithholdingtaxesonintra-companyinterestpayments.Banksnowalsogeta"

SingleBankingLicense"

throughouttheEUandfinancialproductsauthorisedinoneEU-memberstatemayalsobesoldinotherstates.Moreover,theEUhasissuedlegislationtourgethereductionofcross-bordercashtransfertariffs.WecanthusconcludethatEUliberalisationandderegulationprocesseshavemadeprogress[TempletonandClark,2001;

ECB,2002;

Hartmann,MaddaloniandManganelli,2003].

AnothermajordevelopmentinEuropewastheintroductionoftheeuro.ThissinglecurrencyhaditsrootsintheEuropeanMonetarySystem（EMS）underwhichforeignexchangecontrolsweregraduallylifted.LaterdevelopmentsculminatedintheEuropeanMonetaryUnion（EMU）thatknittedmonetarypoliciestogetherandresultedintheeuroasasingleinter-bankandsecuritiescurrencyin1999（exceptforDenmark,GreatBritain,andSweden）.InJanuary2002,allcountriesinvolvedalsoadoptedtheeuroastheircurrency.Asaresulttheforeignexchange（FX）risksonshort-termfinancialmarketswerereduced,whiletheycompletelydisappearedintheeurozone[Satillá

n,BayleandThygesen,2000;

TempletonandClark,2001;

ThedevelopmentshadanimpactonPhilips.Nowadays,Philips'

CorporateTreasuryhassixfocalareas:

corporatefinance,financialriskservices,theoperationalhub,cashmanagement,insuranceandtreasurycontrol.CorporateFinanceismainlyinvolvedinfinancialstructuring.FinancialRiskServicesidentifiesandmeasuresfinancialriskexposures.TheOperationalHubistheprocessingcentrefortreasurytransactions.CashManagementfocusesonday-to-daymanagementofcashflows.Itsaimsaretosavecostsofcash,tolowerfinancialrisksandtoshortenthebalancesheetbyfocussingonfinanciallogisticsandinformationcontrol[BiekartandSwagerman,1999].Insuranceisalsoapartofthecorporatetreasury.TreasuryControlhandlesinternalcontroloffinancialcashflows.Intheremainderofthisarticle,wewillmainlydealwiththelargelyinterrelatedoperationalhubandcashmanagementactivities.Theoperationalhub,afairlynewandstillexpandingservicecentre,consistsofa"

paymentfactory"

foroutgoingcash,anarrowlydefinedin-housebank,amiddleofficeforpaymentsandreceipts,aswellasacorrespondingbackoffice.

Asaconsequenceoftheliberalisationandderegulationtendencies,Philips'

transactioncostsfellwhileEuropeanintra-firmcashflowtransfersgraduallybecamelesstaxed4.Formerlylocal,small,illiquidanddisintegratedmoneymarketshavebecomeverylarge,veryliquidandhighlyintegrated,especiallyintheeurozone.Costsofprecautionarycashbalancescouldthusalsobebroughtdownconsiderably.Liberalisationandderegulation,however,havenotyetmadeuseofthecheapbankingsystem.Inefficientpayableandcollectionproductssuchaschequesarestillinuse,andonlyafewbankscanofferthecompleterangeofshort-termfinancialmarketproducts.Moreover,depositsandloanschannelledviabanks,evenintheeurozone,arestillsmall,quiteilliquidandlocallydifferent.ThatiswhyPhilipshascomeupwithothersolutionstodealwithliquidityissues.Thesesolutionswillbediscussedlater.

Philips'

financialhedginginstrumentscosts（infactcorporatefinancialdistressavoidancecosts）havealsobeenbroughtdownbecauseofthediminishingEuropeancurrencyrisks,especiallyintheeurozone.Thoughshort-termsecuritieseuroinstrumentshavebecomeavailable,short-termmarketsintheeurozonearelaggingbehindthedollarmarketsandPhilipsthereforeonlymaintainscommercialpaperprogramsinriskyUSdollars.Localloans（andlocaldeposits）havebecomeverylimitedwithPhilipsinEurope,asstructuresofferedbyafewlargebanksaremainlyinuse.OfgreatestimportancetoPhilipsaretheovernighteurodepositsandloansatthesebanksthatbearnoFXrisks.Nevertheless,aconsiderableamountofcashflowisinBritishpounds,becausethepoundisanimportantinternationalcurrency.PhilipsthereforealsousesFXhedginginstruments,suchasforwards,futures,optionsandswaps,fortheBritishpoundasthecorporatehedgingstrategyprevailshere.Thisalsocountsforquiteanumberofnon-euro（pegged）currencies,asPhilips'

activitiesoutsidetheeurozonehaveexpandedovertheyears.

3.Centralisationanddisintermediation

Liberalisationandderegulation,aswellasdecliningcurrencyvolatilityandtheintroductionoftheeuro,havemadecentralisationofcashmanagementanddisintermediationmorefeasible.

CentralisationanddisintermediationinEurope

Atrendtowardscentralisedcashmanagementcentres,nettingcashflowsandpoolingcashbalanceshasbecomemoreapparentinEurope[Peters,1999;

VeugerandDeBusscher,2002].Thesecentresmayalsoperformarangeoffunctionsrelatedtoworkingcapital:

speedingupcollections,prudentlymanagingpayments,aswellascautiousorderingandholdingofstock.Moreover,thecentrescanreducebankchargesfordebitbalances,banktransactions,FX-spreadsandotherindirectbankingcosts.Also,currentaccountsanddepositsmaybemanagedwithlesslendingandborrowingrequirements,whileliquidityshortagesandsurplusesmaybelimitedbycontrollingcashlevels.Furthermore,bankrelationsmaybemanagedtofacilitatethefunctionsmentionedabove.Finally,allcorporatefinancefunctionsmaybelocatedat