Oktober 2005 – No.
40
State-of-the-Art
in Corporate Treasury
The goal of the 19th Alpbach Finanzsymposium was to give a broad and profound insight into Corpo-
rate Treasury. Nine bank board members, eighteen experts giving seminars and sixteen presentations
competing for the 'Most Innovative Banking Product' award, as well as the corporate treasury frame-
work developed by Finance Trainer, met with great interest on the part of the 480 CFOs, entrepreneurs
and bankers who attended the symposium from 5 - 7 October.
The conceptual Corporate
Treasury framework developed
by Finance Trainer received
great acclaim from the mem-
bers of the sponsoring banks'
boards. Step 1 is the creation
of the necessary basis in terms
of technical infrastructure and
staff training. We call this the
foundation of Corporate Trea-
sury.
The 'meat' of Corporate Trea-
sury are money market and
capital market transactions to
manage the risk positions of
your company. A great deal of
product and market know-
how is required in order to be
recognised as a professional
partner in the international
treasury market and to provide
a safe framework for the im-
plementation of one's market
opinion. But the precondition
for all this is the set-up of a
proper treasury workflow. Un-
pleasant surprises stemming
from execution glitches and
evaluation problems can thus
be avoided.
Manfred Kunert, President
of the ACI and thus the boss of
all derivatives traders, stressed
in his opening statement: “We
expect to see growing use of
derivatives by companies, inclu-
ding medium-sized enterprises.
Professional training standards
in companies' treasury depart-
ments are essential for success
BANK-FORUM
in this field. ACI – the Financial
Markets Association – there-
fore supports the introduction
of an internationally recogni-
sed Corporate Treasury certifi-
cate such as that developed by
Finance Trainer."
The members of the spon-
soring banks' boards outlined
the derivatives strategies of
their own organisations. “Com-
panies should use market
volatility as long as it is con-
nected with their core busi-
ness and as long as they can
master the attendant risks”,
recommends DDr. Regina Pre-
hofer, Member of the Board
of Bank Austria Creditanstalt
AG. She was promptly sup-
ported by Mag. Klaus Guggl-
berger of Investkredit Bank
AG: "Companies should not
burden themselves with addi-
tional risks. Treasury Sales is
called upon to recognise open
risk positions in the customer's
business and provide sugges-
tions for remedying the situa-
tion.” How far-reaching this
risk hedging can be was
described by François-Xavier
d'Aligny, representative of the
Managing Board of Société
Générale, in connection with
inflation swaps: “When it
comes to hedging against in-
flation, I would not talk about
exotic derivatives. As far as
inflation is concerned every
company has an underlying.”
by Hannes Enthofer
Distinguishing between risk
management and speculation
is very important: “It is neces-
sary to set clear risk targets
and consistently pursue them
in order to avoid becoming a
speculator. The motto is: If you
can't measure it, you can't
manage it”, says Patrick Butler,
Member of the Board of Raiff-
eisen Zentralbank Österreich
AG. A financial market risk
especially popular in Austria
was mentioned by Manfred
Kunert, Member of the Board
of Österreichische Volksbanken
AG: “You have to be able to
afford a foreign currency
loan! A foreign currency loan
against a redemption holder is
simply gambling par excel-
lence. You have to consider
how many organisations con-
trol the Swiss franc market
and what would happen if all
of them attempted to get out
of their franc positions at the
same time”, says Kunert. “IAS
39 carries with it heavy P&L
effects in the hedging of deri-
vatives”, emphasises Dr. Franz
Hochstrasser, Member of the
Board of Erste Bank. Banks
have learned how to deal with
this, but he recommends that
companies should take the time
to get intimately acquainted
with this subject before em-
barking on a Corporate Trea-
sury strategy.
Dr. Hannes Gruber, Member
of the Board of Hypo Tirol Bank
AG, demonstrated how a re-
gional bank deals with the
topic: “Using derivatives when
managing interest risk is part
and parcel of our asset & lia-
bility management. In our
consultations with customers,
understanding the customer is
paramount. We do not enter
into any customer business
without a clearly defined goal
and a common risk estimate”,
says Dr. Gruber. The impor-
tance of derivatives in risk
management was underlined
by Dr. Ernst Löschner, Austria
boss of BNP Paribas: "In the
early 90s interest rates went
into the double digits and one
could not hedge against it.
Derivatives can prevent disas-
ters." “It is not advisable to
enter the Corporate Treasury
business without good infor-
mation systems in place”, in-
sists Dr. Stefan Zapotocky,
Member of the Board of
Wiener Börse AG, emphasis-
ing that the timely valuation
of derivatives is an essential
part of risk management.
A pointer for the future de-
velopment of Corporate Trea-
sury was the “Most Innovative
Banking Product Alpbach
2005” award based on the
verdict of the 480 symposium
participants. The winner was
Bank Austria Creditanstalt AG
with its innovative weather
derivatives, closely followed
To be continued on Page 2
 Continuation from Page 1
by Investkredit Bank AG and
Erste Bank who came second
and third respectively.
Certification
in Corporate Treasury
A growing industry needs
standards. Otherwise there is
a danger of misunderstandings,
mistakes and costly mishaps.
This holds especially true for
the derivatives business, with
its large volumes, fast-moving
markets and tough capital
market rules. Today the use of
derivatives is wide open; only
in their accounting is the lee-
way narrowing. Any scandals
and losses, however, will soon
result in calls for legislation.
In the interbank arena stan-
dards have developed without
legal intervention through the
certified training provided by
ACI – The Financial Markets
Association. In cooperation
with the international ACI and
national certification partners,
Finance Trainer is introducing
the Corporate Treasury*Cer-
tificate to help alleviate the
growing risks faced by compa-
nies using derivatives. Candi-
dates prepare for the diploma
exam via the Corporate Trea-
sury Cyber* School.
At the Alpbach Finanzsym-
posium participants had the
opportunity to test their Cor-
porate Treasury knowledge:
the winner was Mag. Dieter
Freund of Ottakringer Brauerei
AG with a score of 90 per
cent.