Multinationals sweep euros from accounts on daily basis

Sunday, May 20, 2012
By Paul Martin

When it comes to contingency planning for a eurozone break-up, it is typically a German company that has been ahead of the game.

By Alistair Osborne
TelegraphUK
20 May 2012

Industrial conglomerate Siemens acquired a banking licence in December 2010. That allowed it to access directly European Central Bank funds, so cutting its exposure to swings in jumpy currency markets. It also took to parking cash at the ECB, once depositing €500m after withdrawing them from riskier French lenders.

Now, with just about everyone reckoning Greece is heading for the exit, the treasury operations of multinational companies have gone into overdrive. WPP, Reckitt Benckiser and Diageo, to name just three, have taken to a daily sweep of euros from their accounts to reduce the risk of any overnight devaluation.

Sir Martin Sorrell, the WPP chief executive, confirms that the advertising giant is also converting euros it doesn’t need to safer haven currencies, notably the dollar, to minimise risk.

Prudent treasury operations are all part of running a multinational. But, at a time when a Greek exit could see the reintroduction of a rapidly depreciating drachma and all the knock-on effects, contingency planning goes much further than simply limiting exposure to the single currency held on account.

Charles Randell, a partner at law firm Slaughter & May, points out that companies broadly fall into two categories. “There is the financial sector which has been looking at these issues intensively for a long period now, since the regulators told them to start contingency planning.

The Rest…HERE

Leave a Reply

Support Revolution Radio