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Liquidity Management

AEUG Finds Smooth Sailing With Simplified Treasury Structure

Major ship management firm rationalizes multibank structures through J.P. Morgan Access®


About

Headquartered in Hong Kong, Anglo-Eastern Univan Group (AEUG) is one of the world’s largest ship management companies offering technical services, crew management, education and seafarer training. AEUG operates in over 18 countries with oversight over 26,000 professional seafarers and 1,600 shore staff who support ship owners around the world.

AEUG manages its strategic treasury function out of Hong Kong in close partnership with its main subsidiary treasury and payment teams in Singapore, India, the Philippines and Scotland, which service the firm’s in-house corporate and client-related transactions.

 

The Challenge

The ship management industry is growing. Faced with an increasingly dynamic maritime environment, more ship owners are outsourcing the management of day-to-day fleet operations to third-party firms like AEUG.

While this bodes well for AEUG’s growth, it creates complexities for its treasury function. AEUG created separate bank accounts for all its clients to hold and funnel funds for daily operational needs. This meant its treasury had to manage a growing number of bank accounts with various financial institutions. It also had to cope with rapidly rising payment volumes, as well as the challenge of optimizing its own cash as the company expanded.

In summary, AEUG needed to:

  • Streamline its banking relationships and the number of bank accounts, while maintaining clear segregation between client-related and in-house accounts without physically commingling the funds
  • Improve pricing and efficiency in transacting payments globally
  • Efficiently process high-volume, low value FX transactions on behalf of clients with a standardized method applicable to its global subsidiaries
  • Achieve real-time visibility of its cash balances at both the headquarter and local levels
  • Concentrate AEUG’s in-house surplus cash to improve control of cash and liquidity

 

The J.P. Morgan Solution

AEUG appointed J.P. Morgan as its new core cash management banking provider to design a custom treasury structure and implement a comprehensive global cash and liquidity solution.

The solution incorporates banking technology innovations and industry best practices that address the complexities of treasury management within the ship management industry, including:

  • Streamlining over 120 accounts across AEUG’s global operations and adopting multibank reporting services via J.P. Morgan Access® to achieve visibility into AEUG’s global liquidity positions through a single banking platform
  • Integrating J.P. Morgan Host-to-Host to automate payments and record posting in AEUG’s ERP system and reduce operational costs around transaction initiation
  • Gaining full transparency through straight through processing (STP) of FX transactions through J.P. Morgan Access® FX to meet AEUG’s workflow, governance and reconciliation requirements
  • Setting up an Asia Pacific physical cash concentration for in-house accounts through two-way sweeping where surplus USD liquidity at the sub-account level is swept up to the master account in Hong Kong, while shortfalls are swept down to participating accounts against a target threshold amount with client-related accounts excluded from the pooling structure to preserve the need for such accounts to be distinctly managed
  • Leveraging J.P. Morgan’s existing network provider arrangements for domestic over-the-counter transaction services in a number of markets in Asia Pacific
Amid an influx of new clients and opportunities, J.P. Morgan empowered AEUG with the ability to simplify our treasury structure, streamline scores of accounts and drive greater transparency in our processes. The solution resulted in improved efficiencies and increased cost savings.

Aiden Fung, Group Treasurer Anglo-Eastern Univan Group

The Result

AEUG has benefited from greater cost and operational efficiencies as a result of market-leading cash and liquidity solutions, including:

  • A rationalized global account structure that eliminates unnecessary bank relationships and standardizes the firm’s payment authorizers across regions
  • Improved visibility of cash funding through a single unified platform
  • Standardization of global payment processes
  • Full transparency and consistent pricing of FX spreads
  • Increased cost savings through reduction in banking fees
  • Concentration of in-house corporate cash via a physical USD cash pooling structure, eliminating the need to maintain separate credit facilities for each subsidiary

In collaboration with J.P. Morgan, AEUG leveraged industry best practices and innovative treasury technologies to centralize the firm’s treasury operations and deliver greater efficiencies. The unique global solution serves as a key foundation for AEUG’s treasury structure as the firm looks to strengthen their global leadership position within the ship management industry.

Anglo-Eastern Univan Group is a highly commended winner of the Treasury Today 2017 Adam Smith Awards Asia Best Cash Management Solution category.

 


 

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