“There is still so much to do,” says Hui despite introducing new SSCs to Mentor Graphics, citing electronic bank account management (eBAM) as a particular interest of hers and something that she wants to implement in 2013 with the objective to streamline and standardise the bank account opening and closing requirements, as well as the authorised signatory update process.
The senior treasurer at Mentor has already overseen the corporation’s first ever US$1bn revenue figure in 2012 but she thinks eBAM could help the electronic design automation (EDA) firm, whose software helps engineers make network, semiconductor and electronic goods, improve its relations with banks and the efficiency of its treasury procedures.
Hui has already been busy on the banking front having made improving Mentor Graphics’ relations with its credit banks one of her first priorities after joining in January 2009. The Wilsonville, Oregon, US, headquartered company now has five credit banks after Hui renegotiated with HSBC, US Bank, KeyBank, Bank of America (BofA) and Citi, renewing the US$125m credit facility with favourable terms and making the latter its primary international bank for Europe and Asia. All the banks’ financial stability and reliability were reassessed as part of the review, with some former partners being dropped or reassigned roles, as part of a wide-ranging counterparty risk assessment overview.
The CitiConnect system and the Payment Network file-based transfer solutions, supported by Citi and BofA respectively, are primarily used for straight-through processing (STP) of payments and information reporting, although Hui says she “might look at SWIFT later on down the line to further enhance multibank connectivity”.
“As part of the bank overhaul, I used the Association for Financial Professionals (AFP) scorecard to conduct a formal bank relationship review and continue to do so on an annual basis,” says the AFP board member and certified treasury professional (CTP).
Commenting on her use of the AFP bank scorecard, Hui says “it offers feedback for our banking partners to better understand how we perceive the value, quality, and cost of the services received. In addition, it provides clarity on how well issues and services are dealt with, and allows both parties to explore new business opportunities as a result of the review.” It is much quicker than doing a full request for proposal (RFP) programme and can tell you what banks are good or bad, and for what procedures.
“You need to be continually looking at counterparty risk, including banks, as part of your job as a treasurer and also ensuring that the best available rates are being obtained for your company – whether that is interest or savings rates,” Hui continues, stressing that the low interest rates available at the moment are too good an opportunity for any firm to turn down. “Of course, on the flip-side it does mean that finding good places to invest your money [as a treasurer] is more difficult, especially with the spectre of increased regulations possibly surrounding money market funds (MMFs) and the like.” The new capital adequacy rules coming in post-crash, such as Basel III, could also impact bank relationships and encourage more bank-independent investments in the future.
Instability is a given at the moment it seems with Hui first saying that it is “a very interesting environment for corporate treasurers at the moment with threats and opportunities out there”, before going on to admit that actually a “challenging time” might be a better word for it, “where you constantly need to talk to your bank, peers and supply chain” to survive a tough business environment.
A non-finance related instance of instability that Hui has been through since joining Mentor Graphics involved the corporation’s legal entity in Pakistan. The company wanted to name an Indian national, a finance controller of the India SSC, as the company director of the Pakistani legal entity. However, it found out that the Pakistani government was questioning the company’s intent of appointing a non-resident, particularly an Indian national, to the directorship of a Pakistani company. “Being a multinational company, we obviously have to be aware of international sensitivities,” explains Hui diplomatically. The high-tech nature of electronics design sometimes has national security implications it seems.
The fluctuations in the various currencies across the 29 countries where Mentor Graphics has a presence is perhaps of more interest to the senior corporate treasury manager of the corporation as 59% of the firm’s revenue comes from outside of the US.
Hui is a member of a four-person treasury team at the multinational EDA firm’s headquarters in Oregon, US, overseeing a cash manager who ensures that finance is in the right place, at the right time, and a treasury manager who runs a foreign exchange (FX) hedging programme across 29 countries with the US$ as the base currency. Additional staff are based at three shared service centres (SSCs) around the world.
“We’re not immune to FX risk, but we have a really good hedging programme to alleviate it,” explains Hui. “Repatriating offshore cash is also a big issue for us as much of the technology world has extended chains linking design teams and customers in the West with manufacturing bases in the East.” Shuffling finance around these chains is sometimes not easy with restrictions surrounding the Chinese and Indian currencies, for example.
Presumably the new shared services centres (SSCs) that Hui has established in Singapore, India and Poland at Mentor Graphics will help in this regard, as well as in introducing greater efficiency to the firm’s treasury operations. In her short-time at Mentor the Hong Kong-born US citizen has moved one SSC from Ireland to Poland, and overseen the establishment of new SSCs in Singapore and in India to deal with its operations on the sub-continent and the surrounding area.
The Polish centre looks after all the European entities, including Israel and Morocco, having replaced the old Irish SSC due to tax and efficiency reasons, while the new Indian SSC looks after Pakistan and Egypt, and processes all account receivable (A/R) and payable (A/P) processes. The Singapore SSC manages key finance functions for Japan, Korea, Taiwan, and China.
“We don’t generate so much surplus cash in China presently, although this is changing, but repatriating cash from Europe and India – where many of the same restrictions that impact China apply – is our biggest challenge,” says Hui. With the growth of China as an electronics design centre, as opposed to an assembly centre, this pattern is already changing and the Hong Kong-born Hui is excited about the possibilities this opens up.
The Rise of the East
“I’ve been back to Hong Kong lots of times to see family, and to Beijing and Shanghai on five or six occasions, to participate in business meetings and I love to go there because it is changing and expanding so rapidly,” says Hui. “I remember moving to Oregon in 1982 as a small child and being shocked at how advanced it was, as well as how green and quiet it was in comparison to Hong Kong.”
The island was still under British administrative control at that time of course and was just getting into its stride as an advanced beachhead for the later development of mainland China itself, once control of Hong Kong was handed back in 1997.
Hui has an interesting perspective having spent her early years in a Chinese environment and then had an American education through high school and on to obtaining an MBA from Portland State University in 1994. The drive and ambition of the two countries is certainly something that she recognises in both cultures and she is genuinely excited about seeing how they both develop over the coming years and, hopefully, come to understand each other better. “America has such experience and knowledge and China is the growing country at the moment so their relationship will set the template for my company, and indeed the world for the foreseeable future.”
The implementation date of Europe's revised Markets in Financial Instruments Directive, aka MiFID II, is fast approaching. Yet evidence suggests that awareness about the impact of Brexit on MiFID II is, at best, only patchy and there are some alarming misconceptions.
Banks might feel justified in victim blaming when fraud occurs, but it does little for customer confidence.
Politicians have united in urging the Reserve Bank of Australia to lend its backing to the digital currency by officially recognising it.
In the aftermath of the Brexit referendum, it was feared that the consequences would be catastrophic. Now, 14 months on, we’ve seen how the UK has weathered the storm – at least in the short term.