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Liquidity Management

A World Leader in Leisure Vehicles

J.P. Morgan optimizes global liquidity operations of prominent leisure vehicle company


About

A world-renowned company in the leisure vehicle space, its global reach includes manufacturing plants across the United States, Brazil and Asia. This industry leader also offers retail financing, insurance and insurance-related programs to its customer base.

At a Glance

  • J.P. Morgan plays an indispensable role in the company’s international treasury operations. It serves as the concentration bank for cash management and liquidity across all regions outside of the United States, extending the existing relationship on the parent level
  • BRL* liquidity is a key strategy for the company as it looks to optimize its balance sheet. The company strives for high yields in both short and long term investments while meeting its working capital needs in cash management and daily operations

The Challenge

The company’s primary objective was to establish a best-in-class cash management and liquidity structure in Brazil which would optimize its use of its working capital. The company also needed to streamline daily cash management in order to add liquidity efficiency on the subsidiary level.

The J.P. Morgan Solution

A global multi-entity structure was implemented to incorporate Brazilian balances to the Global ECR (earnings credit rate) program.

As a result of the plan, balances in Brazilian reais (BRL) are accounted under the program contributing for the global offset, taking advantage of earnings credits generated locally to offset fees within the billing group globally.

Brazil Landscape

Local interest-bearing accounts are not permitted by the Central Bank of Brazil. Therefore, banks typically provide investment options to move funds from Demand Deposit Accounts (DDA) to Time Deposits. However, returns are impacted in the short term as a result of the IOF federal tax, which is applied in Brazil to gross interest along a regressive scale during the first 29 days, going from 96% impact on the first day and decreasing gradually to 0% on day 30.

The Global ECR program not only suits the client’s needs but also spots its demands from both operational and return perspectives. J.P. Morgan is exceeding the client’s expectations by delivering both an efficient investment alternative as well as a safe and sound cash management offering in Brazil, which serves both the local and global teams. Overall, Global ECR was clearly the unique and differentiated structure that led to the company awarding J.P. Morgan with its business in Brazil.

Bruno Katayama, Brazil Treasury Services Coverage

The Impact

  • The Global ECR structure aims to provide the client with better returns when compared to local time deposit sweeps, while also being compliant with the group’s investments policy
  • By partnering with J.P. Morgan as its consolidated provider, the client was able to better manage global liquidity and increase efficiencies
  • Balances remain liquid, allowing easy access to cash for working capital needs
  • Full visibility is provided through real-time balance reporting and consolidated billing information via the global billing group through J.P. Morgan ACCESS® OnlineSM

 

 

 

J.P. Morgan is the marketing name for the Treasury Services business of JPMorgan Chase Bank, N.A. and its affiliates worldwide.

©2018 JPMorgan Chase & Co. All rights reserved. JPMorgan Chase Bank, N.A. Member FDIC.

The products and services described in this document are offered by JPMorgan Chase Bank, N.A. or its affiliates subject to applicable laws and regulations and service terms. Not all products and services are available in all locations. Eligibility for particular products and services will be determined by JPMorgan Chase Bank, N.A. or its affiliates.

JPMorgan Chase Bank, N.A. at its London Branch is authorised by the Office of the Comptroller of the Currency in the jurisdiction of the U.S.A. Authorised by the Prudential Regulation Authority. Subject to regulation by the Financial Conduct Authority and to limited regulation by the Prudential Regulation Authority. Details about the extent of our regulation by the Prudential Regulation Authority are available from us on request (Firm Reference Number: 124491)

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Registered in South Africa as a branch of a foreign bank, JPMorgan Chase Bank, N.A. and operates under a banking license and is regulated by the South African Reserve Bank.

All complaints must be directed to Compliance on jhb.compliance@jpmchase.com

Details of FAIS Ombud
Office of the FAIS Ombudsman
Name: The Ombud for Financial Services Providers
Postal Address: PO Box 74571, Lynnwood Ridge, 0400
Telephone number: 012 762 5000 / 012 470 9080
Facsimile number: 012 348 3447
Email Address: info@faisombud.co.za
Website: www.faisombud.co.za

For Brazil: Ombudsman J.P. Morgan: 0800-7700847 / ouvidoria.jp.morgan@jpmorgan.com