Case Study

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Case Study
For SABMiller
Citi’s multicurrency cash concentration strategy
delivers considerable cost savings
The Challenge
UK-based SABMiller is one of the world’s largest brewing companies, with 200 beer
brands and revenue of over USD21 billion (March 2008).
With brewing interests and major distribution agreements in over 60 countries — in
both developed markets and fast-growing ones such as China and Russia — SABMiller
has a complex liquidity management structure. Moreover, having grown largely by
acquisition, the company has operational and liquidity management structures.
“We wanted to address the problems posed by our structure and reduce working
capital requirements, while ensuring sufficient liquidity for our business units,”
explains Giles Newell, the company’s Deputy Treasurer.
In addition, SABMiller wanted to align its treasury strategy with a broader finance
strategy to achieve the “holy trinity” of liquidity management: cost reduction,
process standardization and risk reduction. The company also aimed to establish an
infrastructure for future treasury projects, such as intercompany netting and foreign
exchange centralization.
The Innovation
Citi’s innovative solution for SABMiller was a pragmatic mix of cash concentration
and notional cash pooling, where funds could stay in the name of the business
unit — an important consideration in a decentralized company.
Instead of local business units borrowing against short-term deficits and depositing
short-term surplus cash with local banks, they could borrow or deposit with the
group treasury.
Having appointed Citi on the basis of its geographic coverage, multicurrency cash
pooling ability and competitive pricing, SABMiller embarked on the first phase of a
multi-currency cash pooling project covering nine currencies, ten business units and ten
countries. Future phases covering Latin America, Africa and Asia are being explored.
The Result
“Implementation was tricky,” says Newell, “the complexities of achieving buy-in
from local businesses cannot be underestimated. But it was worth it. SABMiller
has greater clarity in its liquidity management, and centralized balances mean
improved rates for deposits or the ability to repay external borrowings. By netting
balances, we avoid paying overdraft and deposit margins. Overall, the savings
are considerable.”
Global Transaction Services
www.transactionservices.citi.com
© 2010 Citibank, N.A. All rights reserved. Citi and Arc Design is a trademark and service mark of
Citigroup Inc., used and registered throughout the world.
659689 06/10
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