Treasury and Trade Solutions
14
Ruth Wandhöfer
Global Head,
Regulatory and
Market Strategy,
Treasury and Trade
Solutions,
Citi
Corporates rightfully spend most of their time focused on their operational
strategy and goals while constantly assessing the impact of the changing
macro-economic environment on their business. Treasury’s role is to respond
to the needs of the business and use its knowledge and tools to manage
risk, enable the company to fund itself and operate efficiently, and help the
business to achieve growth in a sustainable way.
Necessarily, economic and
geopolitical conditions also
play a major part in treasury
planning. Similarly, a third factor
— regulation — has always been
an important consideration in
treasury management. However, in
the post-crisis period, regulation
has become ever more crucial. A
large part of treasury resources at
many corporates is now focused on
keeping up to date with the evolution
of regulations.
The nature of regulatory change is
twofold: Some new rules directly
affect corporates; others impact
them indirectly by targeting the
banks they work with, which can
affect the availability of certain
types of financing or products. To
compound the challenges faced by
corporates seeking to understand
regulatory change, while many new
regulations are global in nature, their
implementation remains but should
be implemented on a national level.
In some cases there is significant
divergence in how regulations are
framed. In the following section,
we address aspects of two recent
regulatory initiatives that have
significant implications
for corporates.
Basel III: The net stable
funding ratio
Basel III is perhaps the most
significant post-crisis regulatory
change affecting the banking
industry (and indirectly, corporates).
The most recently published
element of Basel III (in October
2014) is the Net Stable Funding
Ratio (NSFR), which is the long-
term liquidity pillar of Basel III. The
other principal liquidity standard is
the Liquidity Coverage Ratio (LCR),
which is intended to ensure that
banks can withstand a 30-day stress
scenario by requiring them to hold
a sufficiently large buffer composed
GLOBAL REGULATORY
OUTLOOK: WHAT CORPORATE
LEADERS NEED TO KNOW
IN 2015
