Transfer pricing transactions are now one of the most scrutinized areas for multinational enterprises. With evolving OECD guidance, BEPS initiatives and an increasing focus on economic substance, tax authorities are examining more closely than ever how related-party financing is structured and priced. Beyond simply demonstrating that a loan exists, tax authorities now expect clear and compelling evidence that every transaction is fully supported by a commercial rationale and complies with the arm’s-length principle.

Beyond ‘quote-based’ transfer pricing

For our global energy logistics client, these changes in regulatory developments triggered a need to adapt to the new industry standards and transfer pricing guidelines. For years, the company had relied on bank-provided quotes to set intercompany loan terms, which was market practice in the past, but which required adjustments given the updates and requirements of the OECD guidance.

“In the past, like a lot of other companies, we used to reach out to the market to our banking partners to request quotes for pricing intercompany loans – and these became our benchmarks,” recalls a company treasurer. “It was market practice back then.”

But with tax authorities now probing the rationale behind transfer pricing, it highlighted the need for a  methodology that clearly articulates how and why each loan was priced. This is where Zanders stepped in with the Transfer Pricing Suite – their automated solution for pricing and documenting intercompany financial transactions.

Entity-level loan pricing

The company’s previous process was that indicative quotes from relationship banks were used as basis to price intercompany loans.  The development in OECD guidelines and requirements, combined with the company’s desire to become less dependent on third parties in the pricing of IC-loans, triggered a project to look at alternative solutions in which a balanced assessment based on qualitative- as well as quantitative aspects were taken into account.

Zanders’ Transfer Pricing Suite meets this requirement, by combining market data, credit analytics and standardized methodologies to assess each borrower’s standalone credit quality. The model adjusts for implicit support, sector dynamics and relevant country risk, ensuring loan pricing reflects the borrowing entity’s true risk profile.

However, while the model delivers transparent, defensible calculations, expert judgment still has a role to play – especially when fine-tuning benchmarks to reflect real-world conditions. "When pricing, I will sometimes question whether the benchmark fully reflects reality," a company treasurer explains.

When I reach out to our account manager at Zanders, he immediately helps, building custom benchmarks rather than simply relying on the software output. This personal contact is exactly what’s needed.

Company Treasurer

Audit-ready reporting

In addition to pricing intercompany loans, Zanders’ Transfer Pricing Suite produces comprehensive, audit-ready documentation and reports for the client. Every step of the methodology – from credit scoring and benchmarking to final margin selection – is clearly detailed. This ensures that each financing arrangement is supported by verifiable evidence aligned with OECD guidance and global transfer pricing standards.

“One of the main benefits was the documenting,” a company treasurer explains. “When you run a report, you get a PDF of 20–30 pages, which provides a really good balance between qualitative and quantitative aspects. Before when we asked for quotes from banks, you’d just get a rate based on general calculations on the banking site, but no insight into how the bank considered qualitative factors or implicit credit support. Those are elements that the software explicitly includes, a unique benefit.”

Accuracy, compliance and efficiency

The migration to Zanders’ Transfer Pricing Suite has given the treasury team complete confidence when presenting their intercompany loan arrangements to authorities worldwide, thanks to the following powerful performance advantages:

• Stronger audit defensibility and regulatory compliance

During audits, the treasury team can now present documentation that aligns directly with OECD guidance and financial transaction standards. Each loan is supported by a transparent chain of evidence, removing ambiguity and eliminating reliance on subjective judgement.

• More accurate, performance-based pricing

By shifting away from bank quotes and geography-driven assumptions, loan margins now reflect the true financial reality of each subsidiary. Strong-performing entities benefit from appropriately lower spreads, while higher-risk borrowers receive pricing that aligns with their credit profile. This approach brings a level of fairness and internal consistency that was impossible under the previous, quote-based model.

• Streamlined operations and reduced manual effort

Loan pricing processes that previously required numerous emails, spreadsheets and time-consuming coordination across time zones, can now be run effortlessly through their Zanders-powered platform. With automated documentation generated at the same time. This frees the company’s treasury team to focus on higher-value strategic initiatives.

• Impact across intra-group financing

Beyond transfer pricing, the company now uses the tool for cash pooling and intercompany guarantees – areas not included in the original project. This provides clarity, confidence, and control across all aspects of intercompany financing.

Transforming your transfer pricing?

Whether your organization is facing heightened regulatory scrutiny, managing complex intercompany financing or seeking to replace legacy processes with a modern, data-driven framework – Zanders provides solutions delivered with expertise and pragmatism.

Get in touch to discover how Zanders can transform your intercompany financing strategy and ensure defensible, transparent, and performance-aligned pricing across your global operations with the Transfer Pricing Suite.

Global market turbulence and the shifting interest rate environment have intensified uncertainty for corporate treasuries in recent years. This has forced greater attention on financial risk – particularly for businesses operating across multiple continents and managing exposure to volatile financing costs. For our global energy logistics client, these external pressures arrived at the same time as major internal changes, presenting an ideal opportunity to reassess existing treasury practices. 

“There were a lot of new faces and new knowledge with the changes at the company – it seemed a logical moment to also review all the policies and procedures in place,” says a company treasurer. “This triggered a discussion on risk management – what policies we had in place and whether they were still fit for purpose.” 

Time for pragmatism and validation 

While hedging policies existed, they were informal and inconsistently applied. As market volatility increased, it became clear that the company needed a more formal, structured framework to provide the clarity now expected – both internally and by regulators. 

“We decided it was time to formalize our policies,” the company treasurer adds. “There was more focus internally on how market volatility could impact our results. We were regularly being asked what was driving revaluations in our financials and how we could smooth this by structuring differently or applying hedge accounting.” 

The treasury team embarked on a large-scale project to refresh and refine policies and document their future risk management approach. However, while internal discussions clarified objectives and processes, to have complete confidence in their approach required more than just internal agreement. They also needed to be sure that their policies were aligned with market best practices and that their hedging strategies would withstand the scrutiny of management, auditors and regulators.  

“We realized we needed validation,” the client explains. “We wanted to know whether what we were doing was correct, whether we were missing something and how our approach compared to market practice. Were we under-hedged or over-hedged compared to peers?” 

Making risk tangible 

Zanders was a natural choice to conduct this benchmarking exercise and provide the independent, expert view the company needed. The treasury team trusted them from an earlier transfer pricing project and valued their approach – in particular the blend of technical depth and practical execution. 

We like Zanders’ pragmatic approach.

Company Treasurer

“Once you start talking about hedging policies, many consultants immediately ask for SAP dumps going back 15 years and expect you to fill an entire data room. I was afraid of that. We weren’t at the start of a project – we were almost finished – we needed a partner who could validate our work without creating a massive administrative burden. Zanders understood this.” 

Instead of a heavy data-driven exercise, Zanders designed a focused, efficient process structured around two interactive workshops: an exploratory session to discuss and map existing processes and a second session to validate conclusions. 

It really helped to get validation from an external consultant, you want to know whether what you’ve built actually makes sense, whether you’re missing something, and how competitors approach the same issues.

Company Treasurer

Within just a few weeks, Zanders delivered a clear validation report accompanied by a set of practical recommendations. One of the most valuable was linking hedge decisions more closely to the company’s financial sensitivities – a shift that has made it far easier to communicate risk to senior management.  

“These are really pragmatic solutions that have improved our policies, and our top management can see the results immediately,” says the company treasurer. “When we explain why we hedge, or what happens if we don’t, the impact becomes tangible. It’s no longer abstract. We can show: ‘If you do this, here’s the risk. If you do that, here’s the outcome.’ It makes presenting the figures much easier, and it helps management truly understand the numbers rather than just percentages.” 

Reshaping perspectives on risk 

By combining structured validation with practical recommendations, the project not only strengthened the company’s interest rate risk framework but also gave the treasury team renewed confidence in their approach. 

“Overall, the outcome of the project wasn’t to radically change our approach – it confirmed we were on the right track,” says the company treasurer. “But it also led to changes that have created more awareness and understanding across the company about the importance of risk management.”  

Perhaps most importantly, the exercise reframed the company’s view of risk in the core. “We used to think of risk management purely as minimizing risk,” the company treasurer says. “Now we see it as balancing risk, cost and impact – making informed decisions rather than automatic ones on multiple levels.” 

Looking to elevate your interest rate risk strategy? 

From volatility in global markets to rising expectations from boards, auditors and regulators, interest rate risk management has never been more critical. Zanders brings the expertise, structure and independent perspective needed to strengthen your framework and turn risk insights into strategic clarity. 

Get in touch to discover how we can help you build a clearer, more resilient approach to interest rate risk – ensuring transparency, control and confidence across your financial decision-making.

DLL (De Lage Landen) is a global asset finance company headquartered in Eindhoven, the Netherlands, and a wholly owned subsidiary of Rabobank. Operating in more than 25 countries, it delivers leasing and asset-based financing solutions across a variety of industry sectors, including agriculture, construction, energy transition, food, healthcare, industrial, technology, and transportation. With a strong focus on responsible finance, the company supports businesses to access capital, manage risk, and make the transition to more sustainable business models.

Central to the company’s financial infrastructure is its global treasury function, based in Dublin, Ireland. This team manages the liquidity and Treasury risk management needs of the group. The team consists of an experienced group of highly qualified financial services professionals who are dedicated to meeting the treasury needs of DLL, covering everything from cash management to foreign exchange and interest rate hedging.

A critical turning point

A core element of DLL’s risk strategy is the use of interest rate swaps to mitigate exposure to interest rate volatility. Given the size and complexity of its global lending portfolio and the direct impact that interest rate movements can have on company earnings, these instruments are essential for maintaining financial stability and predictability.

“We have two large portfolios – euro interest rate swaps and US dollar interest rate swaps,” explains Coyle, Head of Hedge Accounting at DLL. “To mitigate the fair value movements of those swaps, we run macro fair value hedge accounting models in euros and dollars.”

These models allow DLL to align the value of derivatives with the risks they offset. This reduces earnings volatility, provides a transparent view of the company’s risk position, and ensures compliance with accounting standards.

For years, DLL’s hedge accounting models were developed and maintained by a previous provider. Due to regulatory requirements they were no longer allowed to support the models beyond 2025.

Faced with a tight deadline to transition to a new solution, DLL launched a competitive tender process to identify a partner capable of building fair value macro hedge accounting models for both their euro and dollar swap portfolios. To prevent disruption to DLL’s hedge accounting process, replacement models needed to be ready for testing in early 2025, ahead of full deployment a few months later. This challenging timeline relied on delivering a complete, fully tested and operational solution as quickly as possible, rather than following a more gradual, phased approach.

Zanders’ approach stood out because they proposed building a Python-based application from the start – delivering the end product we needed, and within the timeline that we wanted.

Coyle, Head of Hedge Accounting at DLL.

“Another provider suggested an Excel build first, then a Python version later – essentially two separate projects, which would not only take a lot longer but also impacted on the price as well.”

Rapid prototyping and agile development

Once selected in late 2024, Zanders began working on replicating the models. Despite having no access to the original model’s codebase, the Zanders team was able to reverse engineer DLL’s hedge accounting methodology in just a few weeks based.

“They started in December, and by the end of January we had our first models ready for testing,” Coyle recalls.

From February to March, both Zanders and DLL conducted independent back testing using the legacy model as a benchmark to validate outputs. This rigorous comparison helped ensure consistency and build confidence in the new models.

“This gave us comfort that we were on the right road,” Coyle says. “We did find a few things that we wanted to change – such as adding certain risk controls  – and the Zanders team was very open to suggestions. These were implemented quickly, and it was a very easy process.”

By the end of March, the new Python-based applications was fully operational, enabling a seamless transition with no disruption to DLL’s interest rate risk strategy.

Faster, simpler, more integrated

While the primary focus of the project was the replication of DLL’s existing models, it ultimately evolved into an opportunity to streamline and modernize the company’s hedge accountancy processes.

“The new model is much quicker,” explains Marais, Treasury Hedge Accountant at DLL. “The old model had features we didn’t really use that slowed down performance. This was a chance to simplify and focus on what we needed.”

One of the most valuable technical gains was improved alignment with DLL’s internal treasury systems.

“With the new model, we are now able to utilize reports from our own treasury system – that was a significant improvement,” says Marais. Previously, the team had to rely on reports from Rabobank systems and model calculations, but the new model directly interfaces with DLL's internal system. “This makes our work process much quicker and more efficient compared to previously,” Marais adds.

Beyond the technical delivery, the project also stood out for the way it was executed. Working under a tight deadline, collaboration between the teams was critical and made a real difference to the overall experience. The DLL team particularly appreciated Zanders’ responsive and collaborative approach.

IT projects can be quite stressful, but this one was remarkably stress-free. That’s a reflection of a robust, collaborative process and great people. If someone asked whether we’d recommend the Zanders team for a project like this, we wouldn’t hesitate.

Coyle, Head of Hedge Accounting at DLL.

Interested in transforming your treasury infrastructure?

Whether you're navigating regulatory change, replacing legacy models, or looking to gain deeper insights into your risk exposure, Zanders combines advanced modeling with deep industry expertise to deliver accurate and audit-ready valuations.

Find out more about how Zanders can support your treasury and risk management transformation.

Nationaal Warmtefonds was established in 2013 as an experimental fund backed by the Dutch government to help homeowners make their houses more energy efficient. Today, it's a key player in the Netherlands’ climate ambitions, granting over 1.8 billion euro of loans and helping more than 130.000 households make their homes more sustainable.

From cautious beginnings

In the early stages, Nationaal Warmtefonds-backed loans were only offered to homeowners who could afford traditional credit. But in 2015, the Paris Agreement was signed, setting new international climate targets and raising action on energy efficiency to a national priority. This sparked a rapid extension of the fund’s mandate. Notably, the decision was made to expand from financially stable owners to provide access to funding to households with lower incomes. This led to a surge in the scale and impact of the fund.

“Initially the fund grew steadily – in the first year we financed €5 million,” says Ernst Jan Boers, Chairman of Nationaal Warmtefonds. “But within five years, we were doing €150 million a year and it became clear we had to reshape ourselves. The fund was expected to double in size and to support this growth, we needed more than just a loan administrator – we needed the full second and third lines.”

As Nationaal Warmtefonds’ objectives became more ambitious, so did the need for specialist risk management, compliance, and treasury functions. These were services beyond the capabilities of the organization and its existing administrative providers. So, five years ago, the fund set out to find an advisor that could support their growth strategy. This led them to Zanders.  

“In the early stages, it was about managing the funds with boots on the ground,” says Ernst Jan.

Zanders offered treasury knowledge, but they were also willing to do the day-to-day work – and the same applied for compliance and risk. We needed a role that we called ‘fund director’ and Zanders filled that position.

Ernst Jan Boers, Chairman of Nationaal Warmtefonds

Tasked with managing the fund, coordinating with other service providers, and supporting the board, the Zanders team was quickly embedded into day-to-day operations, providing advice and hands-on support across risk, compliance, and treasury. And as the fund rapidly grew to over €400 million a year, Zanders’ role also expanded as it helped the fund navigate growth and the challenges it presented.

Navigating the challenges of fund expansion

A strengthening moment in the partnership came with the near collapse of a large, multi-million-euro eco-renovation of an apartment building, involving more than 180 homeowners. When the construction firm went bankrupt mid-way through the build, the future of the project plunged into uncertainty. Zanders played an important role in enabling the project to proceed – mediating between homeowners, authorities, and internal credit committees, while also designing a financial restructuring plan. With this hands-on, credit management, Zanders helped Nationaal Warmtefonds not only rescue the project (it was ultimately completed to almost zero-emission standards) but also reshape future governance and credit approval processes to reduce risk going forward.

Large, high-stakes projects like this highlighted how fast the fund was evolving and how far its role had expanded beyond its original scope.

“We started with a lifetime from 3 to 6 years for the fund,” Ernst Jan reflects. “But if you look at the scale of the transition and how embedded we’ve become in the national climate effort, we’ll likely be doing this work through to 2050.”

The impact of this growth is that the somewhat short-term nature of Nationaal Warmtefonds’ operational structure was no longer sufficient to manage the growing complexity and scale of its role.

“About a two years ago, things were moving so fast and we realized it was time to become a real organization,” admits Ernst Jan. “Up until that point, we had a board of just four people, each working only one or two days a week. Everything was outsourced – risk, finance, and loan administration. We had good controls, but no one on payroll, and not even a physical office. We were becoming too big for that model and, more importantly, we realized we’re not temporary – we’re actually here to stay.”

At this point Nationaal Warmtefonds decided to insource key service providers, and at the same time, the board transitioned from a part-time structure to working three to four days a week.

“As part of this shift, the role of fund director was no longer needed in the same way,” says Ernst Jan.

Zanders continues to support us – especially in areas like risk, compliance, and treasury – but the nature of the support has changed again. It's now more advisory and less operational, because we’ve built the internal structure to handle much of it ourselves.

Ernst Jan Boers, Chairman of Nationaal Warmtefonds

This marks a new, more consultancy-driven era for our partnership, where Zanders empowers Nationaal Warmtefonds with the expertise, guidance and strategic support to continue to grow the fund and proactively manage risk.

Flexible foundations for the future

From providing hands-on crisis management during complex projects to shifting towards a more advisory role as internal capacity grew, Zanders’ support for Nationaal Warmtefonds has evolved in line with the fund’s growth and changing needs. This flexibility has been crucial in navigating the challenges of rapidly scaling the fund as climate action has climbed the national agenda.

Looking to the future, as the energy transition deepens and new challenges arise, our partnership will keep adapting, continually re-balancing operational support with strategic advice to ensure Nationaal Warmtefonds is positioned to respond effectively and continue to drive forward the energy transition in the Netherlands.

To find out more about how we can support the growth strategy of your business and fund, please contact Eva de Lange.

The games market just keeps getting bigger. And with limits on this growth seemingly uncharted, interest from governments and private sector investors is at an all-time high. Savvy Games Group is a global gaming and esports business, wholly owned by Saudi Arabia’s Public Investment Fund (PIF). Tasked with transforming the Kingdom of Saudi Arabia (KSA) into a global games hub, the Riyadh-based group is pursuing an ambitious investment strategy aimed to rapidly accelerate growth of the sector and maximize the opportunities the Kingdom offers.

Acquisition-driven growth

Savvy is clear in its intention to be the leading force in global games investment. At first glance, this could appear a bold claim for a three-year-old company operating in one of the world’s most buoyant and exciting markets. But it’s a challenge Savvy has already proven it’s well-equipped to deliver. Despite being a relative newcomer to the games sector, through high-profile acquisitions—including Scopely in the US and EFG Group in Europe and the US—Savvy has quickly established itself as an active investor. This has led to fast growth for the business. In just a few years, the Group has expanded to become a global enterprise of more than 3,500 employees across 69 locations in 22 countries.

While the scale and speed of Savvy’s development successfully solidified its reputation and investor profile, it also created a disparate banking and cash management structure. With the Group’s cashflows spanning a global network of more than 40 banks and 400 bank accounts, cash management was cumbersome and inefficient.

A rapid bank rationalization

With centralization as the clear goal, the starting point was to consolidate Savvy’s banking services and implement an inhouse bank in order to harmonize disparate cash management processes. To enable this, in June 2024, Savvy issued a request for proposal (RfP) for the provision of banking services to the Savvy Group.

“After a competitive RfP, we chose Citibank for our global cash management and HSBC for our cash management in the US and in Saudi Arabia,” Saleh Alfadhel, Savvy’s Group CFO, recounts. “We then had to go from 40 banks and 400 bank accounts to two banks and 50 bank accounts in one year.” This was a complex project, involving the establishment of three cash pools—a multi-currency notional pool in London, a US dollar and Saudi Arabian Riyal (SAR) pool in KSA, and a virtual US Dollar pool in the US. But this was only one part of establishing the Group’s treasury function. While bank rationalization and cash pooling created the foundations for a more streamlined and centralized treasury organization, to extract maximum value from this new structure, they also needed full visibility of the group’s cash balances and positions worldwide. This is where a second RfP came in—the selection and implementation of a global treasury management system (TMS).

From selection to solution

Driving Savvy’s treasury technology project was the target to have a new, global TMS for the Group in place by December 2024.

By leveraging Zanders’ technical expertise of Kyriba and deep treasury experience, we successfully developed and implemented best-in-class processes across cash management, payment processing, and in-house banking. Harnessing Kyriba’s functionality, we streamlined and automated our treasury operations for greater efficiency and control.

Dheeraj Parmar (Assistant Treasurer at Savvy Games Group)

With Zanders leading the technical conversations with the vendors, Savvy was able to explore and compare the different solutions on offer in a highly structured, relevant, and informed way. This ensured the selection of a TMS that was the best-fit to deliver high levels of transparency and central control of cash management. The outcome was the selection of Kyriba and the appointment of Zanders to advise on the implementation of the first five modules. The deadline set for completing this was December 2024.

“Between June and December, Zanders implemented five modules of Kyriba,” Saleh says. “In six months, we had a full implementation of Kyriba across our operating companies, the headquarters in KSA, and the three inhouse banks.”

Between June and December 2024, Zanders implemented five modules of Kyriba. In six months, we had a full implementation of Kyriba across our operating companies, the headquarters in KSA, and the three inhouse banks.

Saleh Alfadhel (CFO at Savvy Games Group)

With clarity comes cash control

Savvy’s Kyriba journey may still be in its early stages but the value of the visibility it gives them over their cash position globally is already evident. “As of December 2024, we have a liquidity pool set up, and we have a dashboard in Kyriba showing us 100% of our in-scope balances,” Saleh says. “We estimate that by having full visibility and cash concentration, we can operate the Savvy Games Group with circa 45% less cash globally.”

And there is still more value-driving performance for Savvy to unlock from operating a centralized, digital treasury. Kyriba cloud-based treasury management solutions offer a powerful way for businesses to connect banks, ERPs, apps, and portals. This unifies data, providing not only the clarity and insight to improve liquidity, but also the opportunity to automate processes and improve efficiency. Unlocking this enhanced performance is where Zanders’ work with the group turns to next. “Once we add host-to-host, straight through processing and a shared service center to Kyriba, we should have full automation between our ERPs—SAP in Germany and Oracle in KSA and the US,” Saleh says. “With this, we will be able to automate accounts payable and the treasury department completely.”

Continuing our transformation journey in collaboration with Zanders will allow us to further optimize our treasury operating model while ensuring scalability to support the company’s growth—both organically and through strategic M&A actions.

Dheeraj Parmar (Assistant Treasurer at Savvy Games Group)

To find out more about our treasury transformation services and the benefits we can offer your business, please contact our Partner Mark van Ommen.

We have developed a machine learning model for a leading Dutch bank with over EUR 300 billion in assets to detect potential money laundering activities within its high-net-worth client segment.

Challenge​

Anti-Money Laundering (AML) models typically struggle with a common issue: a limited number of true positive cases for effective model training. To address this, most AML models incorporate some form of anomaly detection to identify unusual patterns in client behavior.​

We focused on the bank’s wealthiest clients, identified by a minimum asset threshold. This presents a unique challenge because, by nature, these clients are already statistical outliers. As a result, we needed to identify anomalies within this group of outliers, significantly increasing the model's complexity.​

The bank has an existing model in place, and our role is to enhance its performance, with a focus on:

• Redeveloping peer groups
• Reducing false positives in AML detection

Model Development

Like most machine learning projects, the development lifecycle is divided into three key phases: feature engineering (which takes up most of the time), modeling, and testing/implementation.​

We designed model features to ensure that normal client behavior corresponds to lower values, while anomalous behavior triggers higher values. This approach enhances the effectiveness of anomaly detection models.​

Collaborating closely with operations analysts, we refined these features to minimize obvious false positives among top-scoring cases. As a result, clients with legitimate activities are less likely to receive high anomaly scores in the final model.​

Peer Groups​

Detecting anomalous behavior among high-net-worth clients—who are all outliers by nature and exhibit highly diverse transaction patterns—requires a nuanced approach. To address this, we grouped clients based on their transaction behaviors to form peer groups.​

Key features were then evaluated by measuring how much a client’s behavior deviated from that of their peers. This method identifies anomalies by comparing clients to peers with similar transaction patterns.​

Our role involved revisiting and refining these peer groups to enhance the effectiveness of peer-based features, ultimately improving the model’s overall performance.

For more information, visit our Financial Crime Prevention page, or reach out to Johannes Lont, Senior Manager.

After a prolonged period of stable low (and at points even negative) interest rates, 2022 saw the return of rising rates, prompting Dutch digital bank, Knab, to appoint Zanders to reevaluate and reinforce the bank’s approach to risk.

The evolution of Knab

Founded in 2012 as the first fully digital bank in The Netherlands, Knab offers a suite of online banking products and services to support entrepreneurs both in their business and private needs.

“It's an underserved client group,” says Tom van Zalen, Knab’s Chief Risk Officer. “It's a nice niche as there is a strong need for a bank that really is there for these customers. We want to offer products and services that are really tailored to the specific needs of those entrepreneurs that often don’t fit the standard profile used in the market.”

Over time, the bank’s portfolio has evolved to offer a broad suite of online banking and financial services, including business accounts, mortgages, accounting tools, pensions and insurance. However, it was Knab’s mortgage portfolio that led them to be exposed to heightened interest rate risk. Mortgages with relatively long maturities command a large proportion of Knab’s balance sheet. When interest rates started to rise in 2022, increasing uncertainty in prepayments posed a significant risk to the bank. This emphasized the importance of upgrading their risk models to allow them to quantify the impact of changes in interest rates more accurately.

“With mortgages running for 20 plus years, that brings a certain interest rate risk,” says Tom. “That risk was quite well in control, until in 2022 interest rates started to change a lot. It became clear the risk models we were using needed to evolve and improve to align with the big changes we were observing in the interest rate environment—this was a very big thing we had to solve.”

In addition, in the background at around this time, major changes were happening in the ownership of the bank. This ultimately led to the sale of Knab (as part of Aegon NL) to a.s.r. in October 2022 and then to Bawag in February 2024. Although these transactions were not linked to the project we’re discussing here, they are relevant context as they represent the scale of change the bank was managing throughout this period, which added extra layers of complexity (and urgency) to the project.

A team effort

In 2022, Zanders was appointed by Knab to develop an Interest Rate Risk in the Banking Book (IRRBB) Roadmap that would enable them to navigate the changes in the interest rate environment, ensure regulatory compliance across their product portfolio and generally provide them with more control and clarity over their ALM position.  As a first stage of the project, Zanders worked closely with the Knab team to enhance the measurement of interest rate risk. The next stage of the project was then to develop and implement a new IRRBB strategy to manage and hedge interest rate risk more comprehensively and proactively by optimizing value risk, earnings risk and P&L. 

“The whole model landscape had to be redeveloped and that was a cumbersome and extensive process,” says Tom. “Redevelopment and validation took us seven to eight months. If you compare this to other banks, that sort of execution power is really impressive.”

The swiftness of the execution is the result of the high priority awarded to the project by the bank combined with the expertise of the Zanders team.

Zanders brings a very special combination of experts. Not only are they able to challenge the content and make sure we make the right choices, but they also bring in a market practice view. This combination was critical to the success of the execution of this project.

Tom van Zalen, Knab’s Chief Risk Officer.

Clarity and control

Armed with the new IRRBB infrastructure developed together with Zanders, the bank can now measure and monitor the interest rate risks in their product portfolio (and the impact on their balance sheet) more efficiently and with increased accuracy. This has empowered Knab with more control and clarity on their exposure to interest rate risk, enabling them to put the right measures in place to mitigate and manage risk effectively and compliantly.

“The model upgrade has helped us to reliably measure, monitor and quantify the risks in the balance sheet,” says Tom. “With these new models, the risk that we measure is now a real reflection of the actual risk. This has helped us also to rethink our approach on managing risk.”

The success of the project was qualified by an on-site inspection by the Dutch regulator, De Nederlandsche Bank (DNB), in April 2024. With Zanders supporting them, the Knab team successfully complied with regulatory requirements, and they were also complimented on the quality of their risk organization and management by the on-site inspection team.

Lasting impact

The success of the IRRBB Roadmap and the DNB inspection have really emphasized the extent of changes the project has driven across the bank’s processes. This was more than modeling risk, it was about embedding a more calculated and considered approach to risk management into the workings of the bank.

“It was not just a consultant flying in, doing their work and leaving again, it was really improving the bank,” says Tom. “If we look at where we are now, I really can say that we are in control of the risk, in the sense that we know where it is, we can measure it, we know what we need to do to manage it. And that is, a very nice position to be in.”

For more information on how Zanders can help you enhance your approach to interest rate risk, contact Erik Vijlbrief.

Médecins Sans Frontières (MSF)/Doctors Without Borders is an international humanitarian organization, best known for their medical assistance in conflict zones and in countries affected by endemic diseases. MSF manages operations in more than 70 countries, providing medical support in the afore-mentioned areas. As a non-profit organization, MSF receives funding from individual donors and private institutions from all around the world. This global footprint generates significant cash flows and financial transactions in multiple currencies, resulting in high foreign exchange (FX) exposures. Previously, these were not adequately managed through a structured FX risk management process.

Three key problem areas

The decentralized and informal nature of MSF’s FX risk management process increased their exposure to currency uncertainty, with both inflows and outflows lacking an aligned approach. Zanders highlighted the following three problem areas:

• No centralized FX hedging strategy. Incoming flows, such as funds and grants, received globally by MSF entities with fund-raising activities (“funding entities”) were directed to one of the five Operational Centers headquartered in Europe to fund field operations. Funds were transferred in their received currency which often differed from the functional currency of the Operational Centers (EUR). The Operational Centers then bore high FX exposures on the received funds as there was no FX hedging strategy in place. The market fluctuations of unhedged currencies resulted in deviations from MSF’s annual target budget.

• Funding of field operations with limited FX risk management. From the Operational Centers, quick transfer of funds to the relevant field operations was prioritized, often without considering FX implications. This posed challenges to the Operational Centers when applying FX risk management techniques as date and amount of outgoing funds was not always known. 

• Insufficient provisions for funding unpredictability. Managing the FX exposure at the Operational Center level was challenging due to uncertainties in the timing and size of grants, variation in income due to inconsistent global performance, lack of internal communication on currency needs, seasonal income peaks and unpredictable funding requirements from their field operations.

A two-step solution

Through discussions, it became clear that MSF’s priority when it came to FX risk management was to safeguard the income from grants and the distribution to field operations, by protecting their annual budget rate. We applied two-steps from our Zanders’ Financial Risk Management Framework to deliver this objective.

• Step one: Identification and Measurement

In the first step, our objective was to identify the FX exposures to determine the correct approach to manage the FX risks. This led to a high-level quantification of the FX risk for each of the five Operational Centers.

To manage this risk, we advised MSF to establish an FX risk management function to manage the FX risk in a coordinated and centralized manner. This allowed for the creation of an FX hedging program consisting of a 12-month rolling forecast of inflows and outflows. This enabled MSF to hedge their net exposures for the next budget year. If the forecast had a high level of accuracy, MSF could hedge a high ratio of this forecast.

By centralizing the FX exposure, net amounts could be hedged centrally to protect the organization from large FX volatility. The hedging contracts would then determine the annual budget rate for that year, and thereby achieving the objective of protecting the annual budget rate.

• Step two: Strategy & Policy

Here, we designed a future FX risk management process and guidelines, incorporating best market practices. We developed an ‘in-common platform’ concept, enabling MSF to centralize and standardize their FX risk management process. This was formalized in an FX risk management policy.

A structured approach to FX risk management

The introduction of an FX hedging program has given the MSF team more clarity on their FX risk exposure. This enables them to manage fluctuations in currency more proactively and pragmatically to minimize the impact on their budgets and optimize funding for their field operations.

“The result is extremely positive,” says MSF’s Treasury Lead. “We used the FX hedging program to determine the annual budget rate for next year. With this, we are very close to our budget, and we have managed to protect at least 80% of the funds and grants for the budget.” Furthermore, the FX hedging program inspired MSF entities to tackle other treasury challenges collectively as opposed to addressing them individually.

However, there are still further improvements ahead. “There are challenges we still face around the accuracy of the forecast,” added the Treasury Lead. “This is something we still need to work on. MSF is now sometimes over hedged or underhedged. To accommodate this, I ask the entities to update the rolling forecast on a regular basis.”

For the future, MSF is considering hedging more than 80% of their budget, but this is dependent on further analysis and improved accuracy of the forecast and performing variance analysis comparisons on the forecast.

The introduction of a comprehensive FX risk management policy has also been crucial in giving MSF more control over their cashflows. By clearly defining stakeholder roles and responsibilities and emphasizing the principle of segregation of duties, MSF has introduced a centralized approach for managing their FX exposures. The group-wide FX hedging program promises significant financial and operational benefits. This strategic shift empowers MSF with greater control over its financial landscape. With a solid variance analysis mechanism on the horizon, MSF is assured to enhance cash flow forecasting and expand its FX hedging program with confidence.

Leverage our FX risk expertise

For organizations eager to navigate the complexities of FX risk and enhance their financial resilience, Zanders stands ready to share its insights and expertise. Contact us today to explore tailored strategies that can transform your financial operations and secure your organization's future. Together, let's unlock the potential of strategic FX management.

For more information, visit our NGOs & Charities page here, or contact Daan de Vries.

VAT Carousel Fraud (VCF) is a significant issue in the EU, costing an estimated €25-50 billion annually. We helped one of the largest Dutch banks become the first to develop a machine learning model specifically tailored to detect this type of fraud.

Challenge​

A team within the bank manually identified several cases of VCF each month. The objective was to develop a machine learning model to replace these investigations while leveraging the team’s expertise. The challenge was to create an effective model despite having a limited number of true positive cases for training.

Model Development​

Most Anti-Money Laundering (AML) models focus on detecting a broad range of money laundering activities. However, anomaly detection models are particularly effective at identifying outliers across diverse behaviors.

In the case of VAT Carousel Fraud (VCF), the behavioral patterns of the missing trader role are more distinct and consistent. To address this, we implemented a hybrid approach that combines supervised and unsupervised machine learning models.

The approach is summarized in the following steps:​

1 - Feature Engineering​

• Converted risk indicators into features, focusing on aspects like network structures and rapid movement of funds.​

2 - Supervised Model​

• Employed XGBoost to identify missing traders within the carousel fraud.​
• Utilized all available true positives to train the model on recognizable patterns.​

3 - Unsupervised Model​

• Implemented Isolation Forest to detect other roles in the carousel fraud.​
• Focused on outlier detection to identify anomalous behavior.

Performance​

Given the large scale of VAT fraud within the EU and the well-defined transactional typologies, we expect the model to deliver strong performance.

The first VAT Carousel Fraud (VCF)-specific models are now in production. A set of alerts was generated using real transaction data and reviewed by experienced analysts, achieving a 20% precision rate in identifying suspicious activities.

​VCF explained ​

VAT carousel fraud, also known as missing trader fraud, exploits the VAT system by allowing companies to import goods VAT-free within the EU, sell them domestically while collecting VAT, and then fail to remit the VAT to tax authorities.

The goods are sold through a chain of companies and eventually exported again, enabling the final exporter to reclaim the VAT. This cycle can be repeated multiple times, leading to substantial tax losses for governments.

For more information, visit our Financial Crime Prevention page, or reach out to Johannes Lont, Senior Manager.

When UGI International, a supplier of liquid gases across Europe and in the US, faced challenges in obtaining real-time visibility on its cash positions, they partnered with Zanders to elevate the performance of their Kyriba system. This started with the transition to the Swift banking system.  

A quest for transparency

UGI International (UGI) is a leading supplier of liquid gases, operating under 6 brands across 16 countries. Every day, the business generates a consistent stream of high value and high volume in-country and cross-border transactions. This feeds into a complex network of disparate, multinational cashflows that the business’ treasury team is responsible for managing. When Nuno Ferreira joined as Head of Treasury in 2021, Kyriba was already in place, but it quickly became apparent that there was considerable scope to increase the use of the treasury management system to tackle persistent inefficiencies in their processes.  

“Lack of visibility was one of our key issues,” says Nuno. “We didn't have access to accurate cash positions or forecasts, so we were lacking visibility on how much cash we had at the end of each specific day. The second thing was that the payment flows were very decentralized. In the majority of countries, payments were still being done manually.” 

Lack of centralization was something that needed to be addressed and this demanded an overhaul of UGI’s approach to bank connectivity. The company’s use of the EBICS (Electronic Banking Internet Communication Standard) protocol had become a significant obstacle to them improving cash transparency and automating more of their payment processes. This was due to EBICS only allowing file exchanges with banks in a limited number of UGI European countries (France). Payments and transactions that extended beyond these geographies had to be managed separately and manually.  

“We had Kyriba but because it was only connected with our French banks with EBICS it wasn’t able to serve all of the countries we operate in,” Nuno explains. “We recognized that going forward, to get the full software benefits from Kyriba, to reduce operational risk, and to get more visibility and control over our cashflows, we needed to connect our treasury management system to all of our main banks. These were the drivers for us to start looking for a new bank connectivity solution.”

The transition to Swift

The Swift (Society for Worldwide Interbank Financial Telecommunication) banking system offered broader international coverage, supporting connectivity to all of UGI’s core banks across Europe and in the US. But making the transition to Swift was a substantial undertaking, requiring a multi-phased implementation to bring all of the company’s banks and payments onto the new protocol. Recognizing the knowledge of Swift and resource to oversee such a large project wasn’t available in their internal treasury team of 6 people, UGI appointed Zanders to bring the technical knowledge and capacity to support with the project. 

“In this day and age, where a lot of technology is standard technology, what you get out of a TMS system depends on who helps you implement it, how much they listen to you, and how they adapt it to meet your needs,” explains Nuno. “You can find technical people easily now, but what we needed was an advisor that not only provides the technical implementation, but also helps with other areas—even if they are outside of the project. There is a lot of knowledge in Zanders about Swift and Kyriba but also about treasury in general. I knew if there were problems or issues, or even questions that fell outside of what we were implementing, there would always be someone at Zanders with knowledge in that specific area.”  

This access to wider expertise was particularly relevant given there was not only a complex implementation to consider but also the compulsory Swift security attestation and assessment. The Swift Customer Security Controls Framework (CSCF) was first published in 2017 and is updated annually. This outlines a catalogue of mandatory and advisory controls designed to protect the Swift network infrastructure by mitigating specific cybersecurity risks and minimizing the potential for fraud in international transactions. Each year, all applicable users of the banking system must submit an attestation demonstrating their level of compliance with Swift’s latest standards, which must be accompanied by an independent assessment. This spans everything from physical security of IT equipment (e.g., storage lockers for laptops) and policies around processes (e.g., payment authorization) to IT system access (e.g., two-factor authentication) and security (e.g., firewall protection). 

“We were not just talking about technical and system controls—we also needed to ensure that there were process controls in place,” says Nuno.  “We didn’t have the right skillset to undertake this security assessment ourselves and we needed consultants to help us to provide the standalone reports showing that UGI follows best practices and has controls in place. This is where the second project came in. Zanders helped ensure everything was in place - the technical parts and the process parts - for the security assessment.”  

Driving change, unlocking efficiency 

With the migration to Swift, Zanders has been able to work with the UGI team to centralize their treasury processes, unlocking new functionality and elevated performance from their Kyriba system. This has dramatically reduced the manual effort demanded from the team to administer cash management. 

“While before I was getting information from all the legal entities over Excel spreadsheets, now we don't need to reach out to our local entities to request this information – this information is centralized and automated,” explains Nuno. “This reduces operational risk because instead of uploading files or creating manual transfers within the online banking systems, it is fully integrated and so fully secured. Which also means we don't need to continuously monitor this process. This also reduces the manual activities and hence the number of FTEs required locally to run daily cash management processes. The intention was to have a secure straight-through processing of payments.” 

The Swift security assessment facilitated by Zanders, not only ensured UGI achieved the baseline standards set by Swift, it also helped to raise awareness of Kyriba and the importance of security protocols both within treasury and in the IT and Security teams. 

“Kyriba isn’t just a system to provide a report - if something goes wrong, it really goes wrong and creating this awareness was an added benefit,” says Nuno. “Doing this assessment forced us to make time to really look at our approach to security in detail. Internally, this prompted us to start discussing points that we would never normally address - simple things like closing your laptop when you’re away from your desk. This then starts to become part of the culture.”  

The initial drivers behind the project were to tackle lack of visibility in UGI’s treasury systems. These outcomes were accomplished. The transition to Swift and the integration with the business’ Kyriba system has provided the accurate, real-time visibility on cash positions Nuno and the wider treasury team needed. 

“When you don't have this visibility, you can’t manage your liquidity properly. There is value leakage and this impacts your P&L negatively on a daily basis,” says Nuno. “I now have this control and my cash position is accurate, so any excess cash or even FX exposure can be properly managed and generate higher yield to our shareholders.”  

There is a lot of knowledge in Zanders about Swift and Kyriba but also about treasury in general. I knew if there were problems or issues, or even questions that fell outside of what we were implementing, there would always be someone at Zanders with knowledge in that specific area.

Nuno Ferreira, Head of Treasury at UGI

Advice delivered with commercial empathy 

Overall, this project underscores the value of having an advisor that not only brings deep technical expertise to a project but also understands the realities of implementing treasury technology in a large, international corporate environment.  

“One of the things I really liked was the flexibility of the Zanders team,” says Nuno. “They have a very structured approach, but it’s still flexible enough to take into account things that you cannot control - the unknown unknowns. They understand that within the corporate space, and with banks, it’s sometimes hard to predict when things are going to happen.” 

This collaborative approach also unlocked additional unexpected benefits for the UGI team that will help them to continue to build on the Kyriba system performance and efficiency improvements achieved. 

“The technical capability of our team has grown with these projects,” says Nuno. “From a technical standpoint, we now understand what we can do ourselves and how to do it, and when we need to go to Zanders for help. This knowledge transfer has enabled us to do a lot of things by ourselves that before we needed to go to an external partner for help with, and at the end of the day, this saves us costs.”  

For more information, please contact our Partner Judith van Paassen.