A World Leader in Leisure Vehicles
J.P. Morgan optimizes global liquidity operations of prominent leisure vehicle company
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 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.
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.
Bruno Katayama, Brazil Treasury Services Coverage
- 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
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