In a big deal for Standard Chartered, the bank has been chosen by oil company Shell to deliver a range of local currency cash management services, including cash concentration, payments, and collections for Shell's network of wholesale and retail operations. The contract covers 10 markets in Asia and the Middle East.
The win comes after a lengthy pitch process that saw many of the region's large cash management banks, including HSBC, Citibank and JPMorgan, bow out due to the far-reaching scope of the mandate and, according to insiders, razor thin margins. With many of the usual challengers out of the game, the final race was run by Standard Chartered and ABN AMRO which has links to Shell through its Dutch heritage.
The all-encompassing mandate means Shell will consolidate its cash management relationship, using one bank instead of several. It will continue, however, to use other banks for treasury and corporate banking needs.
The Shell deal follows on from a string of big-ticket cross-country mandates including Sony and Disney which were announced last year, and Time Warner which should be announced this week.
Standard Chartered says it will help Shell to implement a host-to-host communication link to transfer all settlement instructions, remittance information and bank statements in a harmonized format. Much as it does in Europe.
Ian Robertson, vice president of finance for Shell Oil Products East, says Standard Chartered was chosen for its ability to provide regional coverage, but also its on-the-ground presence in local markets.
"This appointment is a significant milestone in our process convergence strategy and we are excited about the benefits of streamlining local currency cash management operations," he says. "As a parallel initiative, the Shell Group is pursuing a primary bank concept for US dollar so that our cash position can be managed on a global basis."
A rival banker comments that while the deal is a good win for Standard Chartered, "it will be interesting to see whether it's truly possible to implement everything that the client is asking for.
"If Standard Chartered is unable to deliver because the scope of the project is unreasonable, it could be the defining moment in cash management contracts of this size" he argues. "It could kill off such deals in future."