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Best Liquidity

Management Solution

Toyota Motor Europe NV/SA

Brussels, Belgium

Stan Blykers, Senior Treasury Specialist

Liquidity solution to ruble challenge for Toyota in Russia

Company profile

Toyota is one of the world’s largest automobile manufacturers and a leading global corporation. Founded in 1937,

Toyota now sells vehicles in 170 countries and employs over 300,000 people. Based in Brussels, Belgium and staffed

by 2,700 people and more than 60 nationalities, Toyota Motor Europe (TME) handles the wholesale marketing of

Toyota and Lexus vehicles, parts and accessories, and manages Toyota’s European R&D, manufacturing and

engineering operations.

The challenge

The major challenge in the region for Toyota Motor Europe (TME) has

been the RUB flows and Toyota Motor Russia (TMR) was using

several banks in Russia. Due to the peculiarities of the domestic

clearing system, the lack of multi-bank solutions in the domestic

market and the geographic disposition of the country, expanding in 11

time zones, it has been almost impossible for large overseas

treasuries to manage their domestic flows efficiently. Over three

billion of operational balances, in local currency, remained

fragmented, creating significant cost, working capital and operational

inefficiencies. TME acknowledged the problem and despite efforts to

reach a solution over the past few years, the cross border flows

remained challenging.

They set out the following objectives to:

Extend the transactional window and gain at least one additional

day of value on their FX swap transactions.

Reduce the fragmented positions across the different

legal entities.

Eliminate idle balances.

Improve the repatriation process to Japan through effective

cross-border flow management.

Reduce the cost on the intercompany loans.

Improve the cash flow forecast.

Manage more effectively counterparty and country risk.

The solution

TME, TMR and their bank worked to structure a multi-layer solution

that enables the clearing of all daily operational transactions in Russia,

the funding of the local accounts and the automated integration into a

London liquidity overlay account, enabling TME to utilise the funds

with good value and eliminate idle cash that was held in fragmented

positions across multiple domestic accounts.

The solution combines a full payments and collections platform for

the RUB transactions, a fully automated domestic physical pool to

consolidate all positions in a single hub, a true end-of-day automated

sweep for the excess operational cash and an offshore interest

bearing RUB account to centralise the net position of all daily activity.

An additional FX swap is performed from the offshore account

without the need to add additional account layers.

Best practice and innovation

The solution achieves optimal results by fully eliminating idle and

fragmented positions and transferring the excess liquidity of different

legal entities and accounts into an offshore domiciled IHB account.

This arrangement maximises the liquidity and delivers working capital

efficiencies without the need of manual intervention, thus generating

operational efficiencies too.

Toyota is one of very few companies to start managing their cross

border flows in a more holistic manner. The cross border element

along with the integrated domestic collections and centralised FX

activity is a creative way to eliminate any manual element through the

process. An additional element that makes this solution even more

innovative is the scalability and the option to fund the Tokyo EUR

Account on a same day basis without any loss of value.

Stan Blykers, Senior Treasury Specialist explains, “A key differentiator

for us is that this solution is fully scalable and can support the

international and domestic growth of the company in a much more

effective manner.”

Key benefits

Elimination of substantial pockets of liquidity held in Russia.

Working capital optimised.

Further enhancement of working capital cycle by the

additional value of two days for the billions of the RUB/EUR

FX swap.

Incremental interest earnings from the consolidating

position in a high-yielding currency.

FX and risk management process optimised.

Stan Blykers and Koji Minami, Toyota Motor Europe and Yuki Ohashi, Citi

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