Katerina Mc Gloin Prague, November 29th 2011

Michael Pechner

Jan Dirk van Beusekom

Committed to Cash

2

Table of contents

PAN-EUROPEAN ACCOUNT STRUCTURES

INTERNATIONAL PAYMENTS & COLLECTIONS

INTERNATIONAL LIQUIDITY MANAGEMENT STRUCTURES

CASE STUDIES

GENERAL OVERVIEW OF BNP PARIBAS

P. 3

P. 9

P. 19

P. 23

P. 28

1

2

3

4

5

3

1

Pan-European Account Structures

4

Overview of alternatives

•Important note:

Parameters to qualify as a resident: incorporation, physical presence, tax registration. BNP Paribas can share the experiences of its clients in this area.

However, clients should seek professional guidance from their tax and legal advisors.

ACCOUNT HOLDER

Decentralized setup Centralized setup

In-

country

Other

Location

AC

CO

UN

T L

OC

AT

ION

Individual entities continue

to own local accounts

All subsidiaries’ accounts are

located in a country of its

currency

Non-resident account

in each country

Non-resident account

in each country

The ownership and location of the accounts used by company (resident vs non

resident accounts) is a key decision and will have legal and tax implications*

All subsidiaries’ accounts are

located in a central country A single central account

Considerations

Central

Location

5

In-country vs. central accounts

IN-COUNTRY ACCOUNTS BENEFITS

Operating in own time zone

Language skills

Local proximity

Local products and services

Local instruments

CENTRAL ACCOUNTS BENEFITS

Minimize borrowing cost and improve debt management

Release trapped cash

Strengthen core financing bank relationships

Risk view on a single entity

Gain better control over groups cash

Further standardisation of payment processes

Simpler bank connectivity, formats and reporting

Improve reporting and management of accounts

* Important note:

BNP Paribas can share the experiences of its clients in this area. However, clients should seek professional guidance from their tax and legal advisors.

In-country accounts local entities accounts offer bring lower potential for

optimisation and control

6

Criteria for selecting a central account location

The following aspects are to be considered when selecting the location

of the central account(s)

Bank / Counterparty risk

Country risk

Legal and tax issues

* Important note:

BNP Paribas can share the experiences of its clients in this area. However, clients should seek professional guidance from their tax and legal advisors.

Payment currency (Euro / non-Euro)

Payment beneficiary location

Cut-off times

Time-zone difference with supported subsidiaries / and SSC

Bank servicing hours

Local language

Risk Perspective

Operational perspective

7

Shared Service Centre

A number of factors will dictate the best location for the Shared Service

Centre

Country risk

Local tax and legal frameworks

Availability of skilled resources (systems and operations)

Labour laws and cost

Travel time from main subsidiaries and Treasury centres

Popular locations

for European SSCs - Treasury - Dublin, The Netherlands,…

for European SSCs - Administrative - Slovakia, Poland, Hungary

To increase efficiency, Accounts Payable functions are often

centralised in a Shared Service Centre (SSC)

The use of bank accounts in the name of the Shared Service Centre leads

to payments being issued “on behalf of” the ultimate debtor

8

Industry trends

Consolidated balance reporting

Standardisation of procedures

Centralised bank relationships

Active intra-group liquidity management

Intra-group payments netting

Value /

cost saving

Decentralised organisation Centralised organisation

Working capital integration

Payment & collection factories

Standardisation

Automation

Centralisation

9

2

International Payments and Collections

10

SEPA & PSD : Regulatory update

SEPA aims at replacing legacy payment instruments with pan-European instruments for credit transfers and direct debits

Banks, clients, etc. are all waiting for clear end-dates

EU regulation should be voted by the end of 2011

11

International Payments

Convenient Payment Initiation -> Channels

Global access -> Correspondent Bank Network

Currencies for Payments and Collections

Streamline Payment Processing

Monitor Transaction Flows

Flexible and Transparent Billing – fees per item, lifting and correspondent bank fees

Control & Limit Costs - > fixed fees vs floating fees, guaranteed OUR fees etc.

Minimize Time Processing -> routing of payments

The following aspects are to be considered when considering the

payment instruments needed

Operational risk

Day to day operations

12

Centralization level

Typical scope of a payment centralisation

DELIVERY

ACKNOWLED-

GEMENT

&

PAYMENT

AUTHO-

RISATION

PAYMENT

FILE RUN

& RELEASE

TO BANK

PAYMENT

TRACKING

& REPAIR

BOOK

KEEPING

&

RECON-

CILIATIONS

SUPPLIER

QUERIES

HANDLING

COMMERCIAL

DISPUTES … …

INVOICE

RECEIPT &

MATCHING

WITH

PURCHASE

ORDER

A single banking communication solution / set of means of payment used

Subsidiaries retain the initiation of payments

Payment /

Collection Hub

Centralised Accounts Payable (then Accounts Receivable) teams

SSC takes over most of the payment process

Shared Service

Centre (SSC)

A single account per currency is “shared” by a group of entities

Payments made by a central entity “on behalf of” the subsidiaries

SSC third-party

payments

13

Worldwide, multi-currency payment factory

Subsidiary A

Subsidiary B

Subsidiary C

Paym

en

t F

acto

ry

Bank 1

Bank 2

Bank 3

PAYMENT FACTORY

DECENTRALISED AP

Subsidiary A

Subsidiary B

Subsidiary C

Bank 1

Bank 2

Bank 3

Where

Payment/Collection hub utilize a single banking communication platform

Shared Service Center takes over most of the payments process

Centralised account payables

Standardised electronic banking channels / means of payment initiation

14

Electronic payments initiation

Multibank connectivity

Payments from in-country accounts

Domestic clearing connectivity

Centralized reporting

A single entry point for reporting

Worldwide, multi-currency payment factory

Paym

en

t H

ub

Other banks

BNP Paribas Hub

…

Subsidiary A

Subsidiary B

Subsidiary C

Subsidiary D

15

Payment factory

Increase control and security

Improve cash visibility and cash flow management

Facilitate liquidity management

Reduce operating costs

Harmonize interfaces with banks - set up a single electronic banking entry-point

Consolidate IT systems

Automate bank account reconciliation

Enforce internal policies (e.g. purchasing) and harmonized processes

Reduce manual payments

Facilitate SEPA compliance

The primary benefits from the payment factory project come from

increased efficiency and control - the more activities are centralised

the more potential for control and cost efficiencies

Typical drivers for a payment factory include

IT efficiencies

Internal efficiencies

Cash efficiencies

16

Channels

Strong relationship + 1 bank Bank independency

• 1 bank for Cash Mgt

• Direct link + ERP(s) like SAP,

Oracle / TMS like Sungard

Quantum or Wall Street System

• Several Cash Mgt banks

• Middleware to communicate with

Internal systems

• Enable to send out / receive standard

formats

E-banking

needs

Characteristics

• Customer’ specificities have to

be handled by the e-banking solution

• Standard protocols to exchange

large volumes with their different banks

• Web banking for specific payments

(i.e: tax and salaries)

Connexis

+

Connexis Gateway

SWIFTNet for Corporate

(+ Connexis)

Multi-bank “culture”

• Several domestic Cash Mgt banks

• Multi-bank solution for payments /

reporting

• Enable to send out / receive standard

formats

Domestic multi-bank

solution

(Isabel, Multicash…)

+

“MT101-MT940”

Large corporate Mid-cap + limited international activities

• Use standard protocols to

exchange

with their different banks

17

SWIFTnet payment factory setup

Real time, STP payments processing

Solution for single transfers in single standard format - FIN messages

Solution for a bulk connectivity a wide range of international and domestic formats via FileAct

Reports adopted to own requirements

Transaction monitorin from end-to-end thanks to the traceability offer

Independent connectivity channel

18

Banks’ proprietary tools

Connexis Cash provides you with real-time, complete visibility and

control over your account balances and account transactions on your

accounts held worldwide

19

3

International Liquidity Management

Structures

20

Liquidity Management for the Corporate Treasurer

• Full control and visibility over the liquidity of the

Group

• Centralised liquidity management leading to

increased return on surplus funds and reduced

borrowing costs

• Allow a positive impact on cost of capital by

eliminating idle balances and optimising the return

on cash positions

• Reduction of the administrative workload by

automating the intra-group transfers

Have the right

amount of

cash, at the

right place, at

the right time,

at an optimal

cost *

.* and in the right currency “as quoted by the ACT

21

Pooling

Domestic vs. Cross-Border

Domestic : accounts are held in the same country irrespective its residency

Cross-Border : accounts are held in different countries

Mono-Entity vs. Multi-Entity

Mono-Entity : accounts belong to the same legal entity

Multi-Entity : accounts of the structure belong to different legal entities

Physical pooling considerations: Thin cap rules, withholding tax / double taxation treaties, interest

and pooling benefit redistribution for non residents

Mono-Currency vs. Cross-Currency

Mono-Currency : accounts in the same currency

Cross-currency : accounts in the structure in different currencies

Single Bank vs. 3rd Bank pooling

Single bank : direct connectivity of participating branches to the pooling engine

3rd bank: more independent banks connect to the pooling engine

Connectivity of the 3rd bank, timing of the pooling transfers

22

Multi currency X-border pooling

Etc…

Automated SDV sweeping to/from

BNP Paribas accounts

through BNP Paribas Cash ConcentrationNon-resident accounts held at BNP Paribas for

Foreign currencies and other accounts opened

in a central location (NB: resident acct for Dutch entities)

Non-Resident and MirrorAccount held at BNP Paribas( for

swwepings from local accounts to a central location)

(NB: resident acct for Dutch entities)

Multi-Currency Balance Compensation at centralizing level

Amsterdam

At local level

Operating

accounts in

Local currency

Etc…

Other countries

Belgium

Ireland

Italy

Etc

UK

Etc

Etc

Switzerland

Etc

Operating accounts held at BNP Paribas for local flows and

Opened in local currency

Interest optimization per currency

EUR USD GBP CHF

Multi-Currency balance compensation

CCY

Etc…

Other countries

Etc…

Other currencies

Finance Co.

Out flow

payments/investme

nt/loan repayment Pool balance in

denominated ccy

23

4

Case Studies

Clients

24

In-House bank for vendor payments in EUR and GBP

About the client

Swiss multinational

Annual turnover € 5.4 billion

Pre-existing ERP: SAP

The solution implemented

A single disbursement account for Europe per currency

“Payments on behalf of” structure

SWIFTNet connectivity

Project objectives, delivered

Enhance level of control and improve security

Eliminate manual payments & automate bank account reconciliation

Improved cash visibility and cash flow management

Cost efficiency and SEPA compliance

25

Building a business case

Source: Richemont – BNP Paribas Cash Management University 2009

FINANCIAL BENEFITS

OF THE RICHEMONT PROJECT*

Variable investment based on scope from 10k€s to +100k€s or more

Typical break-even under 2 years

Process automation > 50% financial benefits

Non-financial benefits

Security

Control

Funds visibility

Contingency planning

Flexibility for volume growth

SEPA readiness

Recurring cost

savings

Break-even analysis

Process

automation

77%

Electronic

banking

rationalisation

15%

Bank charges

8%

K€

26

Worldwide, multi-currency payment factory Electronic payments and cheque letters

The Company

Global leader in electronics and electrical engineering, operating in the industrial, energy and

healthcare sectors.

German multinational – 427.000 employees

Annual turnover €77 bn+

The Challenge

Set up a worldwide payment factory to make supplier payments

“Payment on behalf of” structure for cross-border payments

Payments including cheque letters

Account statements, intraday, transaction status report, debit / credit advices

The Solution

Accounts opened in different currencies including Euro

Execution either through a payment factory account making payments “on behalf of“, or via

bank accounts of local affiliates

27

Pan-European cash-pool (1/2)

The Company

A Swiss multinational

A well-diversified Swiss retailing Group (department stores, hardware store,

furniture stores, sport sores)

Annual turnover CHF 6 bn

The Challenge

Further rationalization of current bank account structure and replacement of current

domestic banks, capable of both supporting extensive retail activities (in France

and Switzerland) and setting-up a full automated cash-pooling

Centralization of liquidity / cash management across Europe for enhanced control

and visibility

Replacing external short-term investing and borrowing of affiliates by inter-

company loans with Group Treasury

Reduction / minimization of risks (credit/counterparty, operational)

28

Pan-European cash-pool (2/2)

Choice of 2 locations for the master account: Luxembourg for EUR and Switzerland for CHF,

GBP and USD

Maintaining of few legacy third-party banks for cash collection in some countries where BNP

Paribas has no capability

More than 150 accounts pooled

MASTER ACCOUNT

EUR

Entity A

EUR

Entity C Entity D Entity E Entity B Entity F Entity …

Luxembourg France Switzerland

Entity C

EUR

Entity A

CHF

International

Master account

CHF

Centralisateur

BNPP Genève

Entity B

CHF

…

CHF

BNPP Champagne-Ardennes BNPP Genève

Entity C

CHF

Magasin

BGL Luxembourg

Pooling with third-party banks Pooling with third-party banks

29

5

General Overview of BNP Paribas

30

Strong European roots with global reach

Asia 4% GCC Africa 1%

Latin America 2%

Eastern Europe, Turkey & Mediterranean 5%

France 36%

Italy 11%

Belgium 10%

Luxembourg 3%

Australia Japan 1%

Other Western Europe 15%

North America 11%

A strong financial partner

Key figures

22.6 bn. € revenues / 4.7 bn. € net income as of H1 2011

200,000 staff in the world, incl. 160,000 in Europe

A presence in more than 80 countries

22 million individual clients worldwide

200 000 corporate banking clients

#2 bank in Euro zone by market capitalization: 65 bn. €

Precise business mix management

A well balanced business mix, stable over the years:

1/2 Retail Banking

1/3 CIB

1/6 Investment Solutions

Risk management quality

Bank of the real economy

Innovative in product and service offering

Acquisitions: strict financial criteria/rolled-out integration process

One of the strongest banks in the world…

S&P AA - stable

Fitch AA- Stable 28/06/2011

Moody’s Aa2 Under review 15/06/2011

With a solid level of capital…

Tier 1 Ratio: 11.9% as of 30/06/2011

Common Equity Tier 1: 9,6% as of 30/06/2011

And a competitive edge in funding

31

Global Presence

BNP Paribas has one of the largest cash management footprints worldwide

32

Europe Regional presence

The European home market

Cash management capabilities in 23 countries

across Eastern/Western Europe and Scandinavia

Full access to all local and European payment

systems

A retail network in 7 countries

France, Belgium, Luxembourg, Italy, Ukraine,

Poland and Turkey

Germany and the Netherlands are viewed as two

new strategic markets for cash management

150 Corporate Banking centres in Europe

Cash management domestic and retail countries

Local cash management footprint

Country covered via partner bank

No bank has more domestic markets

in Europe

32

33

Central & Eastern Europe Regional capabilities

• Cash management solutions delivered by BNP

Paribas in 8 countries, extended to the remaining

countries through a strong banking partnership

• Card acquiring capabilities in major countries

including Serbia, Turkey and Ukraine, supplemented

by partnership solutions in additional countries

• Card issuance capabilities in major countries

including Poland, Hungary, Bulgaria, Serbia, Turkey

and Ukraine

• Banking partner in Albania, Belarus, Bosnia and

Herzegovina, Croatia, Kosovo, Serbia, Slovakia and

Slovenia

Comprehensive capabilities

Competitive capabilities

Offer provided through major domestic bank

To be introduced shortly

Not applicable in this country ×

Liquidity Management

Collections

Payments

Channels

Physical cash pooling

Notional pooling

Cash collection

Cheque collection

Direct Debits

Incoming Payments

Cash withdrawals

Cheques payments

Direct debits

Domestic outgoing

Local e-Banking

Global e-Banking Connexis

SwiftNet / Global Host to Host

*

*

Solutions

Bul

garia

Cze

ch R

epub

lic

Hun

gary

Pol

and

Rom

ania

Rus

sia

Ser

bia

Tu

rke

y

Ukr

aine

Isra

el

×

×

×

×

×

×

×

×

×

×

*

34

Awards 2010/2011

TREASURY TODAY

Adam Smith Award

eBAM

EDF pilot

June 2010

TREASURY TODAY

Adam Smith Award

“One to watch”

TEB (Adidas)

June 2010

GREENWICH

First Bank

Cash Management

Eurozone

March 2011

TREASURY TODAY

Adam Smith Award

Payables/Receivables

Contactless Payments

(Leroy Merlin)

June 2011

EUROMONEY

October 2011

TMI

Best Bank

SWIFT for Corporates

Europe

October 2011

TMI

Best Bank

Cash Management

Europe

October 2011

SWIFT

Largest number of

SWIFTNet customers

worldwide

October 2011

GREENWICH

Market Share Leader

Large Corporate

Banking

March 2011

THE ASSET

Best Cash

Management Deal

Asia-Pacific

April 2011

Best Eurozone Bank

for Cash Management

in Asia

35

Each year BNP Paribas sponsors a CASH

MANAGEMENT UNIVERSITY

A 2 day session in the heart of Paris together

with an impressive list of sponsors

Over 150 CFO’s and Treasurers from Large-

Corporate Clients, Corporate Clients & Large

Mid-Caps from all sectors will participate

36

Committed to Cash

37

Contacts

+32 2 312 27 58

38

Disclaimer

This document has been prepared by BNP PARIBAS for informational purposes only. Although the information in this document has been

obtained from sources which BNP PARIBAS believes to be reliable, we do not represent or warrant its accuracy, and such information may be

incomplete or condensed. This document does not constitute a prospectus or solicitation. All estimates and opinions included in this document

constitute our judgement as of the date of the document and may be subject to change without notice. Changes to assumptions may have a

material impact on any recommendations made herein.

This document is confidential and is being submitted to selected recipients only. It may not be reproduced (in whole or in part) to any other

person without the prior written permission of BNP PARIBAS.

© 2011 BNP PARIBAS. All rights reserved.