If treasury summits were awarded medals for timing, then FinanceAsia’s third annual Corporate Treasury Summit held in Manila in August would take gold. Market volatility, the downgrade of the US credit rating and the interminable debt crisis in the Euro zone has raised the importance of effective treasury management as never before.
A full-house of 285 delegates was testament to the relevance of the summit, which was addressed by more than a dozen speakers and opened by Aurelio Luis Montinola, president of the Bank of the Philippine Islands (BPI). Montinola began on an optimistic note observing that Philippine corporations and banks remained strong, even if the volatile external economic environment required treasurers and CFOs to use every available tool to manage their operations. “Effective risk management remains at the forefront of every corporate treasurer’s strategic agenda,” he said. “Included in this is a growing awareness among corporate treasurers of the role robust and dependable technological support has played in realising cash management objectives.”
The first keynote address was given by Amando Tetango, governor of the Bangko Sentral ng Pilipinas (BSP), who explained in broad terms the strategies of the central bank. “Market practitioners live for volatility while policymakers would rather try to limit it,” he said. “Policymakers are wired like this for good reason: stability in the market helps businesses plan better and consumers manage their expenses more intelligently,” he said. “From the perspective of the BSP, our foremost concern is price and financial stability.”
Of note was the importance of encouraging domestic demand to compensate for an expected slowdown of trade with the US, the country’s biggest trading partner. He added that policymakers will likely also expect market particpants to help direct domestic liquidity to the most productive sectors of the economy.
In a wide-ranging and entertaining speech, Cesar Purisima, secretary of finance for the Philippines, then noted — with tongue firmly implanted in cheek — that were he a CEO he would be worried by the absence of his CFO and treasurers at a conference when the markets were open and so volatile. More seriously, the secretary identified three key issues to be addressed if the global economy is to recover: the political debate surrounding the US deficit and how it will affect the role of the US dollar as the global reserve currency; the sovereign debt crisis in Europe; and currency imbalances, particularly in China.
Purisima also reminded his audience that balance sheets must reflect reality as it is the real economy that matters. “If the accounting model can no longer cope with the realities of today’s market, then the decisions we make based on that model may be flawed… and the model may need to be revisited.”
The secretary of finance also noted that global regulatory bodies such as the International Monetary Fund (IMF) need updating to keep pace with the radically changed global economic environment.
“We need to review what the IMF’s mandate is and empower it so that it can have teeth in addressing the challenges we face across the global financial market. We need to make sure they have the power to regulate among countries,” he added.
Post-crisis reality check
Maria Theresa Javier, senior vice president and group head and chief investment officer at BPI Asset Management, had the unenviable task of following Purisima’s speech, but she more than held her own addressing issues surrounding strategic asset allocation. Javier began by acknowledging the heightened uncertainty and risk facing CEOs and CFOs, but noted that there were also increased investment opportunities in light of the very different interest rate environment pre and post-crisis. “For CEOs and CFOs we are very mindful about capital raising activities, particularly when we look at the cost of equity and the cost of debt capital. The interplay between these forces very much affects the decisions the investment community makes in terms of where to allocate assets and the underlying forces and factors affecting these decisions,” she said.
Next up Sherisa Nuesa, managing director at Ayala Corporation and Anthony Raymond Rodriguez, head of treasury and credit, worldwide finance at Integrated Micro-Electronics, gave insightful addresses on either side of the break, and Joel Consing, vice president and treasurer, International Container Terminal Services presented a balanced view on how to position a company’s capital structure in today’s uncertain world. Drawing on both his investment banking and treasury backgrounds, Consing challenged the audience to ensure that their balance sheets were ready for any eventuality, and gave pointers as to how treasurers could achieve an optimal capital structure.
After lunch, Fronde Anywhere general manager, Craig Eades, shed light on some of the possibilities presented by mobile treasury. BPI executive vice president, treasurer and group head of financial markets group, Antonio Paner then explained in an exceptionally well-received address how best to exploit hedging derivatives as a tool to combat currency risk.
The programme was rounded off with presentations from Francisco Roque Lumbres, partner, financial services risk management, SGV & Co and Kenneth Uy, president and CEO of BPO International, but not before a lively panel session on supply chain finance. While the Philippines may not be as familiar with these programmes as some Asia-Pacific markets, the discussion — which featured Citi’s Ravi Saxena, head of trade, global transaction services, and Mylene Arnaldo Caparas, country head, global transaction services — provoked a lengthy Q&A illustrating just how interested Philippine treasurers and CFOs were in learning more about the benefits these programmes can have on corporate working capital and risk mitigation.
This story was first published in the September 2011 issue of FinanceAsia magazine.