MAYBE STATE-OF-THE-ART: INTERNATIONAL CASH MANAGEMENT

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1 MAYBE STATE-OF-THE-ART: INTERNATIONAL CASH MANAGEMENT

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3 3 TABLE OF CONTENTS INTRODUCTION 5 PAN-EUROPEAN PRESENCE OF UNICREDIT GROUP 6 UniCredit Group The first truly European bank 7 Cash Management and ebanking with UniCredit Group 7 International CASH MANAGEMENT 8 Cash Management initiated by the customer 9 FlashPayment 9 International Account Management 9 MultiCash 9 EuropeanGate 9 SWIFTNet for Corporates 10 Cash Management fully outsourced to the bank 10 Cash Pooling 10 PHYSICAL (Effective) POOLING 11 Zero Balancing 12 Target Balancing 12 Trustee Interest Calculation 12 NON-PHYSICAL POOLING 13 Notional Pooling 14 Margin Pooling (Interest Enhancement) 14 Trustee Interest Calculation 14 SUMMARY And contacts 15

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5 5 INTRODUCTION Quite apart from ensuring the smooth and efficient processing of domestic and foreign payments and the financial transactions associated with cross-border trade, centralised cash management is a challenging task for companies operating worldwide, particularly when conducted on an international scale. The aim of this brochure is to outline the facilities for international and multi-bank cash management currently offered by UniCredit Group.

6 6 PAN-EUROPEAN PRESENCE OF UNICREDIT GROUP

7 7 UniCredit Group The first truly European bank UniCredit Group has a network of more than 10,000 branches servicing 40 million clients in 22 European countries. Its core markets are Austria, Germany, Italy and Central and Eastern Europe (CEE). Its international network is made up of branches, representative offices and banking subsidiaries in 50 countries worldwide. The Group has a first-mover advantage in the European market and benefits from the significant diversification of its revenue streams, both in geographical terms and in respect of its business activities. We share best practices and product innovation throughout the Group with the aim of enhancing the quality and the standard of the services we deliver to our customers. We nonetheless retain the best local knowledge and a constant and sustainable quality of advisory services and products, and we pay special attention to maintaining our proximity to regional markets. This is our way of creating long-term, sustainable value. UniCredit s business approach is reflected in its business divisions, which underpin its drive towards enhancing global capabilities and sustainable growth. Global Trans action Banking (GTB), the Group s global business line comprising international transaction services for international financial institutions, trade and export finance, and cash management, enhances the Group s ability to serve its financial institutions and corporate customers. This goal is achieved by leveraging the international network and supporting local distribution with cutting-edge products and services in trade and export finance, cash management and ebanking areas. Cash Management and ebanking with UniCredit Group UniCredit Group has gained a remarkable reputation as a provider of cash management and ebanking solutions. With an individual approach to our customers requirements, our cash management specialists take account of the complete financial value chain. Starting with an in-depth analysis of processing and cash flow management, then moving on to day-to-day electronic banking, and finally finding the most effective solutions for managing group-wide European liquidity positions and assets, we seek ways of improving our customers current cash management activities and catering to their specific demands to their utmost satisfaction. With a focus on the European and CEE markets, cash management and ebanking constitute two of the Group s core business activities. They bring together the various countries where we operate while integrating matters such as new technical, regulatory and political developments including SOX 1), Basel II and SEPA. PAN-EUROPEAN PRESENCE OF UNICREDIT GROUP WESTERN EUROPE CENTRAL, SOUTHERN AND EASTERN EUROPE Austria France Germany Great Britain Azerbaijan Bosnia and Herzegovina Bulgaria Latvia Lithuania Macedonia Montenegro Turkey Ukraine Greece Croatia Poland Italy Luxembourg Norway Spain Switzerland Czech Republic Estonia Hungary Kazakhstan Kyrgyzstan Romania Russia Serbia Slovakia Slovenia 1) The Sarbanes-Oxley Act of 2002 (commonly known as SOX).

8 8 INTERNATIONAL CASH MANAGEMENT The main focus of this brochure is on UniCredit s international cash management services. We will therefore take a closer look at the products and services available under this heading, starting with cash management initiated by the customer and progressing through to the various possibilities for fully automated cash pooling outsourced to the bank.

9 9 Cash Management initiated by the customer FlashPayment FlashPayment enables you to settle cross-border transfers extremely quickly. Payments are credited to the beneficiary s account the day after execution. And it is not even necessary to request this accelerated type of transfer. If the following criteria are met, payments will automatically be carried out at these attractive terms at no extra cost: The payment order must show the beneficiary s account number or IBAN (i.e. the International Bank Account Number, if available) and the BIC of the beneficiary s bank (i.e. the bank s SWIFT address). The payment is either in euro or the local currency of the beneficiary: FlashPayment transfers may not entail a currency conversion on either the payer s or the payee s side. Both the ordering customer and the beneficiary hold an account with UniCredit Group. The UniCredit Group banks presently offering FlashPayment are located in: Austria Bosnia and Herzegovina Bulgaria Croatia Czech Republic Estonia Germany Hungary Italy Latvia Lithuania Poland Romania Russia Serbia Slovakia Slovenia Ukraine International Account Management Our International Account Management Service offers optimal support for your in-house cash management. Your foreign account-holding banks send your account statements electronically (SWIFT MT940 end-of-day statements, SWIFT MT942 intra-day statements) to Bank Austria, and they are then available to you along with your domestic account statements. On the basis of this information, for example, payment transfer orders (domestic and foreign payments in the country-specific format and/or in SWIFT MT101 format Request for Transfer ) can be created using your electronic banking solution to allocate your liquidity appropriately. MultiCash This international electronic banking software is a tool that allows you to handle your international payments as cost efficiently as possible and offers the perfect basis for cash management. MultiCash provides you with information about all your accounts held worldwide (SWIFT MT940, SWIFT MT942). Several payment modules enable you to define domestic and foreign payments in the local country format or in SWIFT MT101 format. After you place orders on our bank server, which functions as a single point of entry, they are distributed and forwarded to the relevant account-holding UniCredit bank for execution. Due to its modular design, MultiCash can be tailored to your company s country-specific needs. EuropeanGate MultiCash and many other electronic banking solutions are connected with EuropeanGate. This technical platform enables us to be your single point of entry into UniCredit Group. There is no need for you to send your payment transfer orders to each account-holding bank in UniCredit Group yourself. You just transmit them to us via your electronic banking solution and EuropeanGate takes care of the execution, distribution and routing for you. EuropeanGate even converts country-neutral formats like SWIFT MT101 or other common industry standards (depending on the electronic banking product) into country-specific national formats if necessary.

10 10 SWIFTNet for Corporates Our SWIFTNet solutions provide you with direct access to a global network which was originally designed for simple bank-to-bank communication. As an identified and authorised participant, you have a direct connection to any of your banking partners via one single entry point. Depending on your company s structure and needs, we offer two SWIFTNet options: MA-CUG (Member Administered Closed User Group): Within MA-CUG, banks act as the service provider and entry point into the SWIFT network for their customers. Each bank administers its user groups itself. Customers can be members regardless of the legal form of their company. Communication standards between the service-providing bank and its customers are bilaterally defined. Of course, a corporate can be a participant in more than one MA-CUG, but a separate agreement has to be concluded for each MA-CUG. By choosing Bank Austria as your entry point, you optimally benefit from our network with Bank Austria as your service provider, you also have access to all other UniCredit Group banks in this single MA-CUG. Cash Management fully outsourced to the bank Cash Pooling With UniCredit cash management solutions, all accounts for a group of companies held in one or multiple countries and with different banks at home and abroad can be combined into a so-called cash pool. Balances on the various accounts are pooled automatically. The different value dates are taken into account with specific pooling procedures, and the funds are concentrated on a master account specified by the customer. The goals of efficient cash pooling are the optimisation of interest revenue and the reduction of the group s internal funding costs. We can offer you a range of automated physical and non-physical cash pooling solutions tailored to the organisational structure of your company and your international presence. Two messaging services are available for data exchange: FIN: FIN is SWIFT s core store-and-forward messaging service. Financial data are formatted according to SWIFT message types, e.g. MT940, MT942, MT101, etc. The use of MT101 is recommended for single high volume and date sensitive payments. FileAct: FileAct supports non-swift message types and bilaterally agreed formats between the bank and the customer. Thus the Austrian payment standards PAYMUL and DIRDEB as well as other separately defined formats can be used for data exchange. It is particularly suitable for bulk payments. SCORE (Standardised Corporate Environment) Contrary to the philosophy of MA-CUG, where SWIFTNet is accessible for corporate customers via one or more financial institutions, SCORE itself is a large user group which is administrated by SWIFT. Banks and companies which are listed on a stock exchange (Financial Action Task Force; FATF) can be members. Once you conclude the framework contract with SWIFT, it is basically possible to communicate with all SCORE member banks. Like MA-CUG, SCORE is also available in the messaging services FIN and FileAct.

11 Physical (EFfective) POOLING 11

12 12 Zero Balancing (Effective Pooling) Zero balancing is a procedure in which, subject to the agreement with the individual banks concerned, account balances are brought down to a nominal level of zero on a daily basis. As the last entry of the day, the credit balances from the participating accounts are swept into the master account and debit balances are offset by the master account. Thus at the beginning of a business day, a zero balance appears on the participating accounts. The funds/depts are credited/debited to the master account on the next working day (without a loss due to different value dates for the customer). The degree to which entries with back and forward value dates can be integrated into physical pooling depends on the respective legal and technical conditions. Zero Balancing Pooling can be offered locally (when current accounts involved in such pooling are held with one UniCredit subsidiary) as well as across borders (when current accounts are held with different banks). Trustee Interest Calculation As prescribed by law, the total interest revenues have to be distributed to the pooling participants in line with the prevailing market conditions ( arm s-length principle ). Let us do that for you. Our auxiliary product Trustee Interest Calculation can be combined with our physical (effective) and nonphysical (notional) pooling products and offers a range of services, such as: Interest calculation where individual interest spreads can be defined for each account under consideration of the arm s-length principle. Account statements and detailed balance reports for intra-group settlement. Issue of payment orders for booking the accrued credit or debit interest onto the pooling participants accounts. Target Balancing Contrary to Zero Balancing, Target Balancing generally pools all accounts to ensure a pre-set balance. Stipulating minimum amounts for transfers helps to avoid very small amounts being automatically transferred, which in turn minimises booking transactions and saves on transfer costs. Entries with back value dates are assigned with the date when they are transferred.

13 NON-PHYSICAL POOLING 13

14 14 Notional Pooling Contrary to physical (effective) pooling, non-physical pooling does not involve any physical transfers. All (credit and debit) balances on the accounts involved in a notional pool remain unchanged; they are just notionally combined. Interest calculation takes place only on the resulting fictitious balance. Interest is subsequently computed for the master account. No interest is credited or charged to the various participating accounts involved in the offsetting. Please note that Notional Pooling is only offered where the legislation imposes no fiscal or legal constraints. Margin Pooling (Interest Enhancement) This service, which is also known as Interest Enhancement, is a special form of Notional Pooling. It offers the greatest flexibility as it can be implemented on a cross-border, crosscountry and cross-bank basis. All balances on the current accounts included in such pooling are hypothetically converted into one currency (e.g. EUR) on a daily basis with credit and debit balances being added up separately. The smaller the difference between total debit and total credit balances, the greater the interest margin (bonus) waived by UniCredit Group s subsidiaries will be. Trustee Interest Calculation As prescribed by law, the total interest revenues have to be distributed to the pooling participants in line with the prevailing market conditions ( arm s-length principle ). Let us do that for you. Our auxiliary product Trustee Interest Calculation can be combined with our physical (effective) and nonphysical (notional) pooling products and offers a range of services, such as: Interest calculation where individual interest spreads can be defined for each account under consideration of the arm s-length principle. Account statements and detailed balance reports for intra-group settlement. Issue of payment orders for booking the accrued credit or debit interest onto the pooling participants accounts. Interest Bonus Calculation: The calculation of the bonus is based on equal defined accounting periods (quarterly) for all participating accounts the electronic account statements (SWIFT MT940) the monthly average EUR exchange rate or the rate quoted at the end of the preceding month by the European Central Bank for notional conversion of all account balances into, for example, EUR the maximum proportion of the variable margin (difference between Client Special Rate and Client Best Rate). The bonus will automatically be calculated and proportionally credited by each account-holding bank to each participating account in the relevant account currency at the end of the defined accounting period. As there are almost no legal or fiscal regulations, this form of pooling is one of the procedures most frequently used in Eastern Europe, where currency restrictions and controls are often tight.

15 15 Summary and contacts Our primary objective is to support you in optimising your corporate financial position with efficient and effective liquidity management. We provide a range of innovative and combinable products and services and are the perfect partner for tailoring the best solution for your company. We look forward to providing you with you further information, and our cash management specialists would be happy to place their services at your disposal. Please contact them at: tel.: +43 (0) ebanking@unicreditgroup.at Please note Before implementing cash pooling, local and legal prerequisites as well as a company s specific structure have to be considered. We strongly recommend obtaining detailed advice from your lawyer or tax consultant.

16 Subject to errors and misprints. As of April 2009 This brochure was produced by UniCredit Bank Austria AG, Schottengasse 6 8, A-1010 Vienna. And what are your mental maybes? Do you want to capitalise on opportunities, make your plans a reality and achieve your goals? But you re not quite ready to make an entrepreneurial decision because you re not 100% sure about the feasibility of your ideas? We would like to help you change that: We want to work with you to create a basis from which you can successfully turn your current and future plans into a tangible reality. With entrepreneurial thinking and innovative fi nancial models that facilitate growth. As a member of UniCredit Group, Bank Austria offers you a unique balance between local expertise and international know-how, is familiar with the business sectors and strategies of its customers and can offer you the highest level of support using its leading international network. This will turn many a maybe into a realistic option. Let s start! M/04.09/ST/XX