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Dara Kavanagh’s key takeaways from The IACT Conference in Dublin on the 20th November

The annual Corporate Treasury & Cash Management Conference in association with the Irish Association with Corporate Treasures and the Institute of Banking was held this week in Dublin’s Croke Park Stadium.

With leaders in the treasury industry in Ireland and representatives from the European Central Bank lined up to present, the highly anticipated annual conference promised an exciting agenda…

Dara Kavanagh, from Centrus in Dublin, gives us his key takeaways from the conference and what aspects he enjoyed the most.

The theme of change has been on the agenda of most corporate treasurers for a number of years now and this was not absent from this year’s conference.

 

The day kicked off with an insightful economic update on the global markets and the impacts on interest rates from JP Morgan’s Michael J Bell. With the economist overview from a European Commission perspective next on the agenda Michael certainly didn’t hold back on his bold predictions and with the US vs China Trade War one of the key economic items he is monitoring to determine the likelihood of a global recession Michael predicted a 50:50 chance of the US and European Markets entering into a recession in the coming 12 months. Certainly, much higher than the 15% chance he gave this the previous year.

 

Stefan Kuhnert from the office of Directorate General for Economic & Financial Affairs at the European commission told a slightly less gloomy story in that the surge in the services sector should be able to counter the slowdown in manufacturing and help the EU stave off any recession in the coming periods.

 

With volatility in political opinions and often polarised agendas among the many different parties across Europe and beyond, the impacts of trade wars and monetary policy decisions continue to dictate many of the items on the treasurer’s agenda.

 

The next presenters from the ECB and Deloitte’s head of treasury accounting planted the seed of change in many of the attendee’s minds when they discussed the benchmark interest rate reform. Many of the audience hadn’t yet considered the replacement of EONIA with €STR as having a major impact on them but with much of the fall back language for EURIBOR based instruments containing an existing reference to EONIA, Andrew Spooner from Deloitte was very insightful in pointing out that it was not just the IBOR replacement topic that may impact treasurers over the next 12 months. The key point from both presenters here is that the Treasurer should not just rush into implementing changes in this area without having considered all of the associated impacts including the Accounting and operational aspects.

 

After some stimulating networking during the coffee break it was back to the agenda of change and how to manage this effectively in a large treasury organisation. Naomi Holland, International Treasurer for Intel Corporation gave a really energetic and thought provoking presentation on Treasury in a Multi-National Environment that engaged much of the audience and provided really great insights into managing treasury organisational change and the importance of engaging with and retaining your key and trusted people. With IQ and EQ often a measure of talent, Naomi brilliantly discussed that the most important aspect she looks for in any modern treasury professional is “AQ”, being someone with Adaptability Quotient that gives them the ability to adapt and thrive in a fast-changing environment.

 

Barclays ended the morning sessions by discussing a topic that is number one on the agenda of most treasurers at the moment, Currency Volatility, the impactors and the impacts. Really good thoughts laid out by Bryan Conway the head of Irish FX sales at Barclays about how the market perceives currency as being extremely volatile at present when in fact over a longer run outlook currency volatility indicators are at an all-time low due to factors such as  low monetary policy and US-China trade tensions. In fact the trend is towards economic slowdown and therefore policy changes will continue to be a major driver of currency fluctuations in the near term future and the opportunity for corporates is to provide themselves more flexibility in their approach to managing currency risk by using increasingly cheaper alternative products such as currency options when managing their exposures. Combined with the relaxing of the accounting rules around these types of instruments this is an area for corporate treasurers to explore further in the near future.

 

Post lunch the insights from corporate treasurers continued with ESB and LeasePlan discussing their green bond journey and how much they learned from their recent issuances in the green bond market. With climate change becoming an important theme for many businesses, treasury can lead the way by linking what a company is doing in the environmental space to their financial structure. While both presenters pointed out that the original expected outcome for management was that pricing on these structures may be a cheaper alternative source of finance, the actual outcome was that investor appetite for understanding the business allowed both ESB and LeasePlan to present an entirely different, more detailed prospectus that engaged a wider base of investors. Pricing became the secondary matter with a 15-20bps saving being the highlight.

 

The treasury panel consisted of senior professionals in the treasury sector giving in depth insights into the modern treasury function and the importance of using technology and people in the right way to manage change. The panel discussed treasury as a career and what the key attributes they think will strengthen the modern treasury professional are with common sense and adaptability being the differentiators for individuals seeking a career in treasury these days.

 

The day ended with a great keynote address from the Accidental Historian, Sam Nobel who really engaged the audience in discussing the history behind the collapse of the Berlin wall and what we can all learn from this. I learned more in this 30-minute presentation about history than all the years looking at this in school managed to achieve.

 

How the failure of a Soviet press secretary to prepare for his presentation led to the collapse of the wall and communism in Europe certainly left me with the thought that failure to prepare appropriately will lead you to preparing to fail. How accurate this thought would be for many treasurers in the audience looking at unprecedented periods of change and volatility.