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Liquidity Management

Global Oil and Gas Company

Automating cash concentration while enhancing yield


About

As a tier-one oil and gas company, this organisation serves customers on five continents and in 130 countries. With hundreds of bank relationships around world, driving efficiency is a priority for the business.

The Challenge

Due to the global nature of the oil and gas company’s business and the extensive footprint of its treasury operations, liquidity inefficiencies and potential exposure to counterparty risk were significant challenges for the treasury team. Treasury was interested in centralising its U.S. dollar position in a single location wherever possible in order to gain visibility and control over cash worldwide. Such efforts would allow treasury to manage dollar funding globally, optimise yield on excess cash and ensure strict adherence to investment and counterparty risk policies.

The J.P. Morgan Solution

  • The company requested that J.P. Morgan replace the local entities’ in-country U.S. dollar accounts with dollar accounts in three regional hubs (North America, Europe, the Middle East and Africa, as well as in the Asia Pacific region). This regional consolidation then allowed balances to be swept to London.
  • J.P. Morgan’s solution included a Follow-the-Sun sweep from APAC to London.
  • The solution also involved an Against-the-Sun (ATS) sweep from North America to London, under provision of end-of-day treasury forecasts by the North America treasury team.
  • As a result of the sweep solutions, treasury was able to actively invest excess cash in London.

The Impact

  • After regional consolidation of treasury operations around the world and the implementation of J.P. Morgan’s sweep solutions, the oil and gas company’s treasury team has achieved significant benefits, including full visibility and control over USD balances globally and allowing for efficient central funding
  • The company has been able to optimise its yields, while ensuring full compliance with treasury’s risk and investment guidelines
  • Treasury is now able to close its books in the last time zone of the world, so global liquidity is actively managed and efficiency is achieved

 

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