Cash pooling has traditionally been a popular way of using surplus liquidity, reducing interest costs and centralizing corporate treasuries. Globalization brought new challenges for treasuries in managing funds across borders, in multiple currencies, across acquired companies and subsidiaries, and diverse banking groups. Not all jurisdictions were “open” for transferring funds across borders. This led to the notional pooling of funds across the globe so that corporations could still free trapped cash to reduce the interest burden.
Using Notional Pooling, the banks’ corporate clients can minimize the cost of borrowing and also reduce interest payable.
For example, a global bank with a branch in a country that does not permit physical sweeps can repatriate surplus liquidity to a branch in another country, where it has been paying high interest on an overdraft, through cross-currency balance netting.
The bank can recover the interest lost through fee income, through capital adequacy fees, pooling service charges and so on.
iGTB offers various notional pooling structures based on the client’s needs
Traditional notional pooling
Simple and aggregate pools
Single-currency domestic pools
Multi-currency domestic pools
Cross-border and cross-currency
Single and multi-currency global overlay
Notional pools over sweep hierarchies
Drained pools (sweeps off notional pools)
Non set-off notional pooling products
The solution incorporates a sophisticated, customizable interest rules engine.
Multiple account pooling,
Interest pooling, margin pooling
Provision for withholding tax and capital adequacy
Built-in interest/margin allocation algorithms and configurable rules
Scheduling: manual, automated, immediate, specific time-of-day, end of day
Domestic and cross-border (where regulations permit), single-currency and cross-currency, single-entity and cross-entity
"Take notional pooling into more countries than your competitors can"
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