C. Steinweg Group is a market-leading logistics and warehousing company with over 6,250 employees and warehouses and terminals that span more than 100 locations in 55 countries worldwide. With 175 years plus experience of storage, handling, forwarding and chartering services throughout the world, the company is a renowned and respected logistics partner for the global commodity trade.

Over its long history, Steinweg has demonstrated agility and resilience, responding to market challenges through innovating its approach to logistics and warehousing services and showing relentless commitment to customer services. Over the years, the business has also diversified into commodity financing as an added value service to its logistics and warehousing activities. At the end of 2022, the company appointed Zanders to advise them on the refinancing of two debt facilities. The aim was to provide the business with the robust and flexible access to capital they needed to continue to support, scale and grow their international operations.

The refinancing project comprised of two core requirements:

1. The refinancing of Steinweg’s group credit facility.
2. A new, more flexible credit facility for the commodity finance subsidiary.

Due to an overlap in the counterparties invited to participate in the two transactions, Steinweg saw the efficiency potential of taking both of the transactions to market simultaneously. But this also added complexity in terms of arranging and managing the refinancing process and procedures.

It was not a standard refinancing

Pim Van Der Heijden, C. Steinweg Group

“There was a certain complexity to this project, because the refinancings were interrelated from various perspectives,” says Pim Van Der Heijden, Steinweg’s group treasurer and global head of commodity finance. “It was not a standard refinancing. Especially the commodity financing activity, where we didn't go for just a straightforward, typical trade financing credit facility. We were putting something in place which was not only new for us but also for lenders and the legal counsels involved—we had to get them a little bit out of the comfort zone.”

Steinweg recognised early that they would need external support from a debt advisor to help get banks on board with this more innovative structure and also to optimize the value they would get from the refinancing process as well as adding capacity to the team. Zanders had previously worked with Steinweg when its group credit facility was first renewed in 2017, and this experience contributed to the appointment of Zanders to assist them with the new refinancing transactions.

“We approached a few advisors, but we selected Zanders based on track record and pricing,” Van Der Heijden adds. “We know Zanders and we had a good relationship with them, so we had confidence that they could deliver what we were looking for.”

Advice grounded in robust understanding of market practice

As well as their history and established relationship with Steinweg, it was also Zanders’ experience in the market that influenced their appointment on this project. Whereas a company will go to the market every five or seven years to refinance facilities, Zanders is continuously working with lenders on these transactions. This empowers them with current know-how on market practice regarding terms and pricing. Steinweg recognized the value this could bring to their process.

“It really helps to have a debt advisor who has insights into what's happening in the market, what is possible and what is not possible based on actual transactions—they understand how banks work and what is achievable,” Van Der Heijden says. “When Zanders came up with this alternative structure for the commodity financing facility, there was a certain amount of risk involved with going forward with it. This was however one of the reasons that we started the process early, this gave us time to sound and refine the structure. In addition, we knew that we were in good hands, and we ended up getting the results we wanted from it in terms of gaining flexibility that previously wasn't available and might not have been available with a more conventional approach.”

With the maturity of the group credit facility looming in July 2024, this transaction was mission critical and the driving force behind the timing of the combined refinancing project.

“We wanted to start early, and we set the goal to have the new group financing in place before the end of the year 2023,” says Van Der Heijden. “We started preparing by selecting Zanders as a debt advisory partner at the end of 2022, ready to start the process in early 2023, leaving time to complete the transaction by the end of that year.”

A resilient process

The process started with Zanders sitting down with Steinweg to discuss their objectives and requirements for the refinancing. Various scenarios were then modelled before finalizing the structure and characteristics of the new facilities. The RFP documents were then issued to the group of banks identified as a good match. In this case, six banks were invited to pitch—Steinweg’s existing lenders and a selection of additional lenders that matched the required criteria. Zanders’ attention then turned to collecting responses and creating term sheets for the new credit facilities, starting with the group financing.

When it comes to refinancing processes, it’s always wise to prepare for all scenarios. In this case, particularly given the progressive structure of the new facilities, it was important to be prepared for the eventuality that a lender could opt to exit the process. For this reason, more banks than strictly required were invited to participate.

“The new structure was a bit off the beaten track and while we were keen to push new boundaries, we had to be prepared for the reality that some lenders might not share our enthusiasm,” remembers Van Der Heijden. “This approach paid off when an existing lender decided not to participate. Rather than unsettling the process, instead it served to reassure us that the strategy to include more than just our existing bank in the process was good. And it all worked out.”

Due to the highly structured approach and extensive project set-up, when changes occurred there were provisions in place to ensure they caused minimal disruption to the process. This approach ultimately enabled Steinweg to secure competitive pricing and terms for their new group facility. And importantly, this was achieved comfortably ahead of the deadline set by the maturity of their previous agreement.

While the two financing processes ran in parallel, due to the impending maturity of the group facility, securing this was the primary focus initially. Once the group facility was agreed, attention shifted to the commodity financing facility. Steinweg was looking to increase their credit facility, to give them scalable access to more flexible funding to finance commodities on behalf of its clients. Previously, bilateral loan agreements were used to fund this aspect of the business leading to funding inefficiencies. “We had some goals we wanted to achieve with this new funding structure,” says Van Der Heijden. “The most critical was, of course, securing scalable financial headroom, but flexibility was almost as important.”

To deliver this more scalable and flexible access to credit, Zanders modelled a facility that allowed multiple banks to provide funding for commodity financing under the same loan. As an atypical arrangement, it required Zanders to work closely with each counterparty to gain their support for this novel structure.

“The new structure was relatively off the beaten track, but it provided what we needed, which is a lot of flexibility,” says Van Der Heijden. “And the flexibility it gives us is now paying off daily. We can now have three banks participating in a loan and other banks can also be added to the structure as well.”

Reaping the benefits

The new commodity financing facility not only provides essential access to more sources of funding, but also enables Steinweg to react quicker to opportunities and deliver faster, more seamless commodity financing solutions to its customers.

“The group facility was a lifeline, whereas the credit facility for the commodity financing activities was more of a ‘nice to have’ but now it's really adding value in terms of enabling us to pursue growth,” says Van Der Heijden. “We no longer have to talk to our lenders every time we go to market and that really pays off. Previously, if we had a new commodity financing prospect, we sometimes had to wait two weeks to get an answer from our banks to see if we can use the funding. Now, as long as we’re comfortable that it's within the pre-agreed rules, we can pretty much reply to them the same day.”

Conclusion

This project was not only strategically critical for Steinweg but also represented a bold departure from their existing financing agreements. With Zanders’ guidance, they were able to pursue this ambitious approach with confidence and conclude both of the refinancing projects before the end of 2023. This gave the team the peace of mind that their funding was agreed well ahead of their group facility maturing.

This project underscores the value of having an independent debt advisor to navigate your company through the complexities of structuring credit facilities. From ensuring essential deadlines are achieved and developing innovative structures to maintaining the momentum for the process and securing the most beneficial terms with banks. For more information on Zanders' debt advisory and refinancing expertise, contact Koen Reijnders and visit our Corporate finance page.

We have helped a Dutch bank with over 500 billion in assets understand and realize their data ambitions regarding customer due diligence, sanctions, transaction monitoring, and fraud.

Challenge​

Entering the final stages of remediation, the bank wishes to develop a best-in-class data strategy in the financial crime domain. Having spent the last few years focusing on ensuring short-term compliance, the management team requested Zanders’ help to transition into an institution capable of tackling financial crime proactively.

This project aligns with a wider trend in the financial industry, where institutions, after addressing regulatory findings, invest in augmenting and automating their financial crime systems as a stepping stone toward an integration phase with a holistic view of client risk.

Solution

Zanders proposed a three-step approach:

• Step 1: Determine the current maturity state​
• Step 2: Work along with stream leads to determine ambition
• Step 3: Create and execute a roadmap to guide the bank through until 2027​

In Step 1, we determined the current state of data management regarding customer due diligence (CDD), sanctions, transaction monitoring (TM), and fraud. Since data is a multifaceted and all-encompassing element of an institution’s fight against financial crime, we divided our investigation into six key themes. This structure allowed for better alignment with stream leads within the bank while also enabling comparisons with best practices across the financial industry.

During Step 2, we assisted stream leads in identifying pain points and future objectives, thereby developing ambitions for each of the six themes. These ambitions balanced the bank’s desire to foster a cutting-edge data policy while still being actionable given the available resources—technical and otherwise.

Finally, in Step 3, not only did we bring all ambitions together into a coherent roadmap defining the data strategy through 2027, but we also began executing this roadmap immediately, minimizing the time between vision and realization to maximize value creation.

Moreover, a key deliverable was a comprehensive overview of the primary dataflows between departments. Our experience shows that, in trying to ensure short-term compliance, financial institutions often inherit a legacy of tangled dataflows, where data origins are obscured and key features are redundantly recalculated.

The first step toward resolving this issue was to carefully analyze how data flows between different pillars (Transaction Monitoring, KYC, Fraud Detection, and Sanctions). Once identified, inefficiencies and vulnerabilities were addressed through improved architecture and governance.

Making the Data Transformation Visual

The broad scope of this project, combined with the large amount of data it involves, poses a risk that stakeholders may struggle to stay informed about developments and decisions.

That’s why, from the very beginning, we committed to visualizing the ongoing transformations by creating a Data Initiative Dashboard to track progress on key data initiatives. This tool enables leadership to monitor and adjust priorities throughout the execution phase and establishes a gold standard for reporting future initiatives in an informative and intuitive manner.

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

Our client faced a challenge with a large volume of KYC/CDD reviews that needed to be conducted periodically, but many did not contain material CDD risks. Zanders supported the development and management of the PR automation model, which automates cases requiring limited research and allows analysts to focus on more complex, high-risk cases.

Challenge​

The traditional approach to CDD case handling requires significant manual effort by analysts. However, many cases that require minimal investigation are still reviewed manually. As a result, the current approach is neither risk-based nor cost-effective.

Typically, a Client Risk Rating model classifies clients as low, medium, or high risk. These clients are then reviewed at set intervals, such as every five, three, or one year(s), respectively. During these periodic reviews, analysts spend considerable time reviewing cases with no significant changes since the last manual review. This process is inefficient, and improvements can be made to make it more risk-based.

Solution

The PR automation model identifies cases that require minimal research and processes them automatically. The process begins with analyzing the current group of clients. From this large dataset, a subset of low-risk clients is identified based on expert knowledge combined with data analysis.

Next, the model determines which additional automated checks are necessary to ensure that the case has not undergone material changes since the last manual review. With these additional checks in place, the case can be processed automatically.

Automating PRs is only possible with a strong data foundation. Zanders assisted not only in developing the PR model but also in ensuring that data quality meets the necessary standards.

Performance

The PR automation model delivers significant cost savings while improving the efficiency and effectiveness of CDD case handling. Additionally, Zanders supports clients in demonstrating to regulators that this model helps transition to a more risk-based CDD approach.

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

Zanders Transfer Pricing Suite is an innovative, cloud-based solution designed for companies looking to automate the Transfer Pricing compliance of financial transactions. With over five years of experience and trusted by more than 60 multinational corporations, the platform is the market-leading solution for financial transactions Transfer Pricing. On March 31, 2023, Zanders and Royal Philips jointly presented the conference "How Philips Automated Its Transfer Pricing Process for Group Financing" at the DACT (Dutch Association of Corporate Treasurers) Treasury Fair 2023.

Context
The publication of Chapter X of Financial Transactions by the OECD, as well as its incorporation into the 2022 OECD Transfer Pricing Guidelines, has led to an increased scrutiny by tax authorities. Consequently, transfer pricing for financial transactions, such as intra-group loans, guarantees, cash pools, and in-house banks, has become a critical focus for treasury and tax departments.

ZANDERS TRANSFER PRICING SOLUTION

As compliance with Transfer Pricing regulations gains greater significance, many companies find that the associated analyses consume excessive time and resources from their in-house tax and treasury departments. Several struggle to automate the end-to-end process, from initiating intercompany loans to determining the arm's length interest, recording the loans in their Treasury Management System (TMS), and storing the Transfer Pricing documentation.

Since 2018, Zanders Transfer Pricing Solution has supported multinational corporations in automating their Transfer Pricing compliance processes for financial transactions.

ROYAL PHILIPS CASE STUDY

Managing over 80 intercompany loans annually and with a wide geographical scope, Royal Philips faced the challenge of complying with their Transfer Pricing obligations. During the conference, Joris Van Mierlo, Corporate Finance Manager at Philips, detailed how Royal Philips implemented a fully integrated solution to determine and record the arm's length interest rates applicable to its intra-group loans.

Mid 2023, Bolt successfully implemented its new full-fledged treasury management system (TMS). With assistance of Zanders consultants, the mobility company implemented Kyriba – a necessity to support Bolt’s small treasury team. As a result, all daily processes are almost completely automated. “It's about reliability.”

Bolt is the leading European mobility platform that’s focused on more efficient, convenient and sustainable solutions for urban travelling. With more than 150 million customers in at least 45 countries, it offers a range of mobility services including ride-hailing, shared cars and scooters, food and grocery delivery. “Bolt was founded by Markus Villig, a young Estonian guy who quit his school to start this business with €5,000 that he borrowed from his parents,” says Mahmoud Iskandarani, Group Treasurer at Bolt. “He built an app and started to ask drivers on the street to download it and try it out. Now we have millions of drivers and passengers, almost 4,000 employees and several business lines. Last August, we celebrated our 10th anniversary. So, we have one of the fastest growing businesses in Europe. And our ambition is to grow even faster than so far.” 

Driven by technology 

Because of its fast growth, Bolt’s Treasury team decided to look for a scalable solution to cope with the further expansion of the business. Freek van den Engel, Treasury manager at Bolt: “We needed a system that could automate most of our daily processes and add value. Doing things manually is not efficient and risks are high. To help us scale up while maintaining efficiency, we needed our Treasury to be driven by technology.” 

Iskandarani adds: “Meanwhile, our macro environment is changing and we had some bank events. In the past years, startups or scale-ups have seen big growth and didn't focus too much on working capital management. Interest rates were low, which made it easy to raise money from investors. Now, we need to make sure that we manage our working capital the right way so that we can access our money, mitigate risks, and that we get a decent return on our cash. That’s when it's controlled by Treasury and invested correctly.” 

Choosing Kyriba

Van den Engel led a treasury system selection process three years ago for his previous employer, where he also worked together with Iskandarani. “That experience helped us to come up with a shortlist of three providers, instead of having a very long RfP process looking at a long list of vendors. We started the selection process in June 2022 and two months later we chose Kyriba because of its strong functionality. Also, it’s a solution offered as SaaS, which means we don't have to worry about upgrades – a very important reason for us. Kyriba has been working with tech companies similar to ours. Another decisive factor was their format library, called Open Format Studio. It allows us to use self-service when it comes to configuring payment formats, reducing our costs and turn-around time when expanding to new geographies.” 

Implementation partner 

For Bolt, Kyriba will function as in-house bank system, and support its European cash pool. During the selection process, the team had some reference calls with other Kyriba users to discuss experiences with the system and the implementation. “One piece of feedback we received was that it works very well to bring in implementation partners to complete such a project successfully. Zanders stood out, because of its proven track record and the awards it had won. Also, Mahmoud and I both had experience with Zanders during some projects at our previous employer. That’s why we asked them to be our implementation partner.” 

In October 2022, the implementation process started. In July 2023, the system went live. Kyriba’s TMS solution covered all treasury core processes, including cash position reporting (including intra-day balance information), liquidity management, funding, foreign exchange with automatic integration to 360T and Finastra, investments, payment settlements and risk management.  

Trained towards independency 

As part of the implementation process, Zanders trained Bolt on how to use the new tool, and assisted in using the Open Format Studio. In this way, the team built the knowledge and experience needed to roll out to new countries more independently.  

Van den Engel: “We aimed to be independent and do as much as possible ourselves to reduce costs and build up in-house expertise on the system. Zanders helped us figuring out what we wanted, explained and guided us, and showed what the system can do and how to align that with our needs in the best possible way. Once we were clear on the blueprint, they helped us with our static data, connectivity and initial system set-up. After the training they led, we were able to do most of it ourselves, including the actual system configuration work, for which Zanders had laid the foundation.” 

Rolling out the payment hub 

With assistance of Zanders consultants, Bolt also set up a framework to roll out the payment hub, for the vendor payments from its ERP system called Workday and its payroll provider, Immedis. The consultants assisted with configuration of initial payment scenarios and workflows. “We made the connections, tested them and did a pilot with Workday last summer. After training and with the experience that we've built up using Open Format Studio, we can roll out to new countries and expand it ourselves. Starting in August, we continued to roll out Kyriba’s payment hub to more countries, and to implement Payroll. With the payment hub we are now live in 16 countries and that's basically fully self-serviced. Apart from some support for specialized cases, we don’t need support anymore for the payment hub.” 

Many material benefits 

Having a small hands-on project team meant no need for a complex project management organization to be set-up. Naturally Bolt and Zanders started using agile project management, with refocus of priorities to different streams as necessary. The Kyriba implementation project was closed within the set budget in 9 months’ time.  

Iskandarani is happy with the results. “It is clear there are benefits of this implementation when it comes to efficiency and risk management. We now have the visibility over our cash and the fact that we have a system telling us that there’s an exposure that we should get rid of, that has a lot of value. Also, we have some financial benefits that we could not have achieved without the system. Today we can pool our cash better, we can invest it better, and we can handle our foreign exchange in a better way. Before this, we have overpaid banks.” 

Reliability and control 

“We could have hired more people”, Van den Engel adds. “But some things are just very difficult to do without this system. It's also about reliability. Even if you have a manual process in place that works, you will see it breaking down from time to time. If someone deletes a formula, or a macro stops working, that becomes very risky. It’s also about the control environment. As a company we're looking to become more mature and implement controls that should be there – that too is very difficult to do without a proper system that can generate these reports, be properly secured with all the right standards that we need to adhere to, or do fraud detection based on machine learning in the future. It's impossible to do all that manually. Those are material benefits, but hard to quantify.”

In countries worldwide, associations of credit information providers play a crucial role in registering consumer-related credits. They are mandated by regulation, operate under local law and their primary aim is consumer protection. The Dutch Central Credit Registration Agency, Stichting Bureau Krediet Registratie (BKR), has reviewed the validity of the credit registration period, especially with regards to the recurrence of payment problems after the completion of debt restructuring and counseling. Since 2017, Zanders and BKR are cooperating in quantitative research and modeling projects and they joined forces for this specific research.

In the current Dutch public discourse, diverse opinions regarding the retention period after finishing debt settlements exist and discussions have started to reduce the duration of such registrations. In December 2022, the four biggest municipalities in the Netherlands announced their independent initiative to prematurely remove registrations of debt restructuring and/or counseling from BKR six months after finalization. Secondly, on 21 June 2023, the Minister of Finance of the Netherlands published a proposal for a Credit Registration System Act for consultation, including a proposition to shorten the retention period in the credit register from five to three years. This proposition will also apply to credit registrations that have undergone a debt rescheduling.

The Dutch Central Credit Registration Agency, Stichting Bureau Krediet Registratie (BKR) receives and manages credit registrations and payment arrears of individuals in the Netherlands. By law, a lender in the Netherlands must verify whether an applicant already has an existing loan when applying for a new one. Additionally, lenders are obligated to report every loan granted to a credit registration agency, necessitating a connection with BKR. Besides managing credit data, BKR is dedicated to gathering information to prevent problematic debt situations, prevent fraud, and minimize financial risks associated with credit provision. As a non-profit foundation, BKR operates with a focus on keeping the Dutch credit market transparent and available for all.

BKR recognizes that the matter concerning the retention period of registrations for debt restructuring and counseling is fundamentally of societal nature. Many stakeholders are concerned with the current discussions, including municipalities, lenders and policymakers. To foster public debate on this matter, BKR is committed to conducting an objective investigation using credit registration data and literature sources and has thus engaged Zanders for this purpose. By combining expertise in financial credit risk with data analysis, Zanders offers unbiased insights into this issue. These data-driven insights are valuable for BKR, lawmakers, lenders, and municipalities concerning retention periods, payment issues, and debt settlements.

Problem Statement

The Dutch Central Credit Registration Agency, Stichting Bureau Krediet Registratie (BKR) receives and manages credit registrations and payment arrears of individuals in the Netherlands. By law, a lender in the Netherlands must verify whether an applicant already has an existing loan when applying for a new one. Additionally, lenders are obligated to report every loan granted to a credit registration agency, necessitating a connection with BKR. Besides managing credit data, BKR is dedicated to gathering information to prevent problematic debt situations, prevent fraud, and minimize financial risks associated with credit provision. As a non-profit foundation, BKR operates with a focus on keeping the Dutch credit market transparent and available for all.

The research aims to gain a deeper understanding of the recurrence of payment issues following the completion of restructuring credits (recidivism). The information gathered will aid in shaping thoughts about an appropriate retention period for the registration of finished debt settlements. The research includes both qualitative and quantitative investigations. The qualitative aspect involves a literature study, leading to an overview of benchmarking, key findings and conclusions from prior studies on this subject. The quantitative research comprises data analyses on information from BKR's credit register.

External International Qualitative Research

The literature review encompassed several Dutch and international sources that discuss debt settlements, credit registrations, and recidivism. There is limited research published on recidivism, but there are some actual cases where retention period are materially shortened or credit information is deleted to increase access to financial markets for borrowers. Removing information increases information asymmetry, meaning that borrower and lender do not have the same insights limiting lenders to make well-informed decisions during the credit application process. The cases in which the retention period was shortened or negative credit registrations were removed demonstrate significant consequences for both consumers and lenders. Such actions led to higher default rates, reduced credit availability, and increased credit costs, also for private individuals without any prior payment issues.

In the literature it is described that historical credit information serves as predictive variable for payment issues, emphasizing the added value of credit registrations in credit reports, showing that this mitigates the risk of overindebtedness for both borrowers and lenders.

Quantitative Research with Challenges and Solutions

BKR maintains a large data set with information regarding credits, payment issues, and debt settlements. For this research, data from over 2.5 million individuals spanning over 14 years were analyzed. Transforming this vast amount of data into a usable format to understand the payment and credit behavior of individuals posed a challenge.

The historical credit registration data has been assessed to (i) gain deeper insights into the relationship between the length of retention periods after debt restructuring and counseling and new payment issues and (ii) determine whether a shorter retention period after the resolution of payment issues negatively impacts the prevention of new payment issues, thus contributing to debt prevention to a lesser extent.

The premature removal of individuals from the system of BKR presented an additional challenge. Once a person’s information is removed from the system, their future payment behavior can no longer be studied. Additionally, the group subject to premature removal (e.g. six months to a year) after a debt settlement registration constitutes only a small portion of the population, making research on this group challenging. To overcome these challenges, the methodology was adapted to assess the outflow of individuals over time, such that conclusions about this group could still be made.

Conclusion

The research provided BKR with several interesting conclusions. The data supported the literature that there is difference in risk for payment issues between lenders with and without debt settlement history. Literature shows that reducing the retention period increases the access to the financial markets for those finishing a debt restructuring or counseling. It also increases the risk in the financial system due to the increased information asymmetry between lender and borrower, with several real-life occasions with

increased costs and reduced access to lending for all private individuals. The main observation of the quantitative research is that individuals who have completed a debt rescheduling or debt counseling face a higher risk of relapsing into payment issues compared to those without debt restructuring or counseling history. An outline of the research report is available on the website of BKR.

The collaboration between BKR and Zanders has fostered a synergy between BKR's knowledge, data, and commitment to research and Zanders' business experience and quantitative data analytical skills. The research provides an objective view and quantitative and qualitative insights to come to a well informed decision about the optimal registration period for the credit register. It is up to the stakeholders to discuss and decide on the way forward.

We conducted a comprehensive review of the model landscape and governance across all KYC & AML models in a leading Dutch bank with over 900 billion in assets.

Challenge​

Although the shift toward a risk-based approach for models and processes in a bank’s first line of defense (1LoD) is widely adopted across the industry, this approach is often lacking in second-line (2LoD) activities. As a result, limited compliance and validation resources are allocated to low-complexity, low-impact models, leaving less time for rigorous evaluation of high-impact, complex models.

We conducted our review by focusing on four key areas: first, clarifying the definition and classification of models; then building a risk-based approach to model risk management given this classification. Finally, we covered model ownership and the overarching landscape.

Model Definition and Classification

What qualifies as a model? This question is as straightforward as it is fundamental. Without a clear definition, institutions cannot build a coherent approach to model risk management. Under the existing framework, several "expert opinion"-based systems were subject to model validation requirements. By leveraging Zanders’ extensive market experience, we refined the definition to align with industry standards, effectively removing these expert systems from the model inventory.

The bank’s existing model risk classification, based on the likelihood and magnitude of reputational risk, did not require an overhaul but benefited from key refinements. Zanders recommended enhancing the framework by factoring in additional elements, such as automation and model complexity. These refinements resulted in a classification system suitable for leading industry models.

Risk-Based Model Risk Management

With a robust model classification established, a risk-based approach to model risk management was implemented. Each model was assessed based on its potential reputational risk and intrinsic complexity, with oversight measures adjusted accordingly.

For example, models with lower risk and complexity were validated using a more qualitative approach, eliminating unnecessary benchmarking and confidence level requirements.

Model Ownership

Ownership is a critical component of the financial crime model landscape. Without clear ownership structures, model maintenance and necessary improvements, such as those prompted by validation findings, become challenging.

A well-defined ownership structure ensures sufficient independence between model development, ownership, and validation, reinforcing accountability and governance.

Model Landscape

Within the Compliance and KYC domains, a wide range of models exist, broadly categorized under:

• Customer Due Diligence (CDD)
• Transaction Monitoring (TM)
• Screening
• Market Abuse
• Investment Risk

Following our review, we provided a detailed visual representation of this often highly complex model landscape. This offered the management team a unique, high-level perspective, helping identify key areas for improvement based on industry best practices and regulatory expectations.

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

In an effort to continuously improve and automate its internal processes, the American multinational cosmetics company wanted to leverage technology and further enhance the Transfer Pricing compliance of financial transactions. As a result, it engaged Zanders to use its cloud-based Transfer Pricing Suite.

Estee Lauder has been Zanders’ client for quite some years. “We have been working with Zanders before in some projects and that always worked very well. In this instance too”, says Bart Taeymans, Vice President Global Treasury Operations. “They helped to draft and execute the bank selection RfP and restructure our European banking structure, and supported with the implementation of SAP Inhouse Cash and Bank Communication Management. And recently, they supported us with their Zanders Inside Transfer Pricing Suite.”

In view of the changed regulatory environment, we wanted to increase control of the entire process. Zanders Transfer Pricing Suite looked as a sustainable tool to automatize the process, while maintaining a robust technical methodology compliant with the OECD TP Guidelines.

Bart Taeymans, Vice President Global Treasury Operations

Challenge

New OECD Transfer Pricing guidelines

With the release of Chapter X by the OECD, the company wanted to implement a new process in order to comply with its Transfer Pricing obligations in-house, without depending on external parties, Taeymans explains. “In view of the changed regulatory environment, we wanted to increase control of the entire process. Zanders Transfer Pricing Suite looked as a sustainable tool to automatize the process, while maintaining a robust technical methodology compliant with the OECD TP Guidelines’’.

Solution

Sophisticated tool

Treasury Director Marc Vandewaeter: “Zanders’ Transfer Pricing Suite is very sophisticated. In addition, during the onboarding process, Zanders added some additional currencies to the tool that were not there yet for us to cover additional regions. Another important thing for us is that we are able to instantly generate the Transfer Pricing reports – including the supporting documents providing details on the economic analyses.”

Due to the tool’s flexibility, Estee Lauder had a managed transition phase. “It’s challenging to change processes, but the tool supported the transition phase in a controlled manner.”

Having all the information in one tool helps us understanding the approach followed and financial information considered for each case. This is important for us as we need to make sure that we fully understand the details.

Marc Vandewaeter, Treasury Director

Performance

Timely implementation

Taeymans: “I think it’s been a great integrated implementation. The team was very supportive, providing clarifications where needed and support when required – all to ensure timely implementation of the new procedure, focused on the start of our new fiscal year.”

Vandewaeter: “The challenge of importing the financial data was that it needed to be implemented in the Zanders Inside tool format, which is required to determine a rating. Luckily all financial data from all our affiliates is already standardized. That makes it easier to reproduce and implement this data. That saves quite a lot of time.”

“The benefit we have is that we are on one SAP instance globally”, adds Taeymans. “That helps us to great extent in retrieving the financial information in a structured manner. So once we had the templates to convert to the information required by Zanders, everything went very well.”

The entire process in one user-friendly platform

Vandewaeter has been intimately involved in working with the tool. “We wanted to make sure that Zanders’ tool would provide a consistent approach for all transactions, in line with what we had done before, and that potential differences in the results could be explained. Having all the information in one tool helps us understanding the approach followed and financial information considered for each case. This is important for us as we need to make sure that we fully understand the details.”

Taeymans: “To have that entire process – from the financial information, credit rating analyses, benchmark rates, to the final reports – featured in one tool is obviously what we’ve been looking for. It’s very important to have it all in one system generating a full report on an entity basis. Of course, you need to know what to enter and what to select. But as a web-based tool it is very user-friendly, easy to navigate and well designed. It is quite easy to extract the pricing for a certain loan. And from an operational point of view, it is also useful to do a simulation and it doesn’t take much time to do that. You need to upload all the financial statements, but it is more dynamic and the pricing update is based on current data. In addition, the support received from Zanders team is very good.”

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Royal FloraHolland is a cooperative of flower and plant growers. It connects growers and buyers in the international floriculture industry by offering unique combinations of deal-making, logistics, and financial services. Connecting 5,406 suppliers with 2,458 buyers and offering a solid foundation to all these players, Royal FloraHolland is the largest floriculture marketplace in the world.

The company’s turnover reached EUR 4.8 billion (in 2019) with an operating income of EUR 369 million. Yearly, it trades 12.3 billion flowers and plants, with an average of at least 100k transactions a day.

The floriculture cooperative was established 110 years ago, organizing flower auctions via so-called clock sales. During these sales, flowers were offered for a high price first, which lowered once the clock started ticking. The price went down until one of the buyers pushed the buying button, leaving the other buyers with empty hands.

The floriculture market is changing to trading that increasingly occurs directly between growers and buyers. Our role is therefore changing too.

Wilco van de Wijnboom, Manager Corporate Finance

Challenge

The Floriday platform

Around twenty years ago, the clock sales model started to change. “The floriculture market is changing to trading that increasingly occurs directly between growers and buyers. Our role is therefore changing too,” Wilco van de Wijnboom, Royal FloraHolland’s manager corporate finance, explains. “What we do now is mainly the financing part – the invoices and the daily collection of payments, for example. Our business has developed both geographically and digitally, so we noticed an increased need for a platform for the global flower trade. We therefore developed a new digital platform called Floriday, which enables us to deliver products faster, fresher and in larger amounts to customers worldwide. It is an innovative B2B platform where growers can make their assortment available worldwide, and customers are able to transact in various ways, both nationally and internationally.”

The Floriday platform aims to provide a wider range of services to pay and receive funds in euros, but also in other currencies, and across different jurisdictions. Since it would help treasury to deal with all payments worldwide, Royal FloraHolland needed an international cash management bank too. Van de Wijnboom: “It has been a process of a few years. As part of our strategy, we wanted to grow internationally, and it was clear we needed an international bank to do so. At the same time, our commercial department had some leads for flower business from Saudi-Arabia and Kenya. Early in 2020, all developments – from the commercial, digital and financing points of view – came together.”

Solution

RfP track record

Royal FloraHolland’s financial department decided to contact Zanders for support. “Selecting a cash management bank is not something we do every day, so we needed support to find the right one,” says Pim Zaalberg, treasury consultant at Royal FloraHolland. “We have been working together with Zanders on several projects since 2010 and know which subject matter expertise they can provide. They previously advised us on the capital structure of the company and led the arranging process of the bank financing of the company in 2017. Furthermore, they assisted in the SWIFT connectivity project, introducing payments-on-behalf-of. They are broadly experienced and have a proven track record in drafting an RfP. They exactly know which questions to ask and what is important, so it was a logical step to ask them to support us in the project lead and the contact with the international banks.”

Zanders consultant Michal Zelazko adds: “We use a standardized bank selection methodology at Zanders, but importantly this can be adjusted to the specific needs of projects and clients. This case contained specific geographical jurisdictions and payment methods with respect to the Floriday platform. Other factors were, among others, pre-payments and the consideration to have a separate entity to ensure the safety of all transactions.”

Strategic partner

The project started in June 2020, a period in which the turnover figures managed to rebound significantly, after the initial fall caused by the corona pandemic. Van de Wijnboom: “The impact we currently have is on the flowers coming from overseas, for example from Kenya and Ethiopia. The growers there have really had a difficult time, because the number of flights from those countries has decreased heavily. Meanwhile, many people continued to buy flowers when they were in lockdown, to brighten up their new home offices.”

Together with Zanders, Royal FloraHolland drafted the goals and then started selecting the banks they wanted to invite to find out whether they could meet these goals. All questions for the banks about the cooperative’s expected turnover, profit and perspectives could be answered positively. Zaalberg explains that the bank for international cash management was also chosen to be a strategic partner for the company: “We did not choose a bank to do only payments, but we needed a bank to think along with us on our international plans and one that offers innovative solutions in the e-commerce area. The bank we chose, Citibank, is now helping us with our international strategy and is able to propose solutions for our future goals.”

The Royal FloraHolland team involved in the selection process now look back confidently on the process and choice. Zaalberg: “We are very proud of the short timelines of this project, starting in June and selecting the bank in September – all done virtually and by phone. It was quite a precedent to do it this way. You have to work with a clear plan and be very strict in presentation and input gathering. I hope it is not the new normal, but it worked well and was quite efficient too. We met banks from Paris and Dublin on the same day without moving from our desks.”

Van de Wijnboom agrees and stresses the importance of a well-managed process: “You only have one chance – when choosing an international bank for cash management it will be a collaboration for the next couple of years.”

We have been working together with Zanders on several projects since 2010 and know which subject matter expertise they can provide.

Pim Zaalberg, Treasury Consultant

Performance

Future plans

The future plans of the company are focused on venturing out to new jurisdictions, specifically in the finance space, to offer more currencies for both growers and buyers. “This could go as far as paying growers in their local currency,” says Zaalberg. “Now we only use euros and US dollars, but we look at ways to accommodate payments in other currencies too. We look at our cash pool structure too. We made sure that, in the RfP, we asked the banks whether they could provide cash pooling in a way that was able to use more currencies. We started simple but have chosen the bank that can support more complex setups of cash management structures as well.” Zelazko adds: “It is an ambitious goal but very much in line with what we see in other companies.”

Also, in the longer term, Royal FloraHolland is considering connecting the Floriday platform to its treasury management system. Van de Wijnboom: “Currently, these two systems are not directly connected, but we could do this in the future. When we had the selection interviews with the banks, we discussed the prepayments situation – how do we make sure that the platform is immediately updated when there is a prepayment? If it is not connected, someone needs to take care of the reconciliation.”

There are some new markets and trade lanes to enter, as Van de Wijnboom concludes: ”We now see some trade lanes between Kenya and The Middle East. The flower farmers indicate that we can play an intermediate role if it is at low costs and if payments occur in US dollars. So, it helps us to have an international cash management bank that can easily do the transactions in US dollars.”

With this came the decision to set up a new company code to separate ASICS Europe’s treasury activities from its commercial activities. Apart from the pros, it raised new challenges too.

ASICS stands for ‘Anima Sana In Corpore Sano’, loosely translated ‘a sound mind in a sound body’. This Japanese company was founded by Kihachiro Onitsuka in 1949. He felt that Japanese youth, who had lived through World War II, were in the process of being derailed and had too few pursuits. Onitsuka wanted to bring back the healthy life through sports, which demanded proper sportswear. And so, he decided to produce basketball shoes under the name Onitsuka Tiger.

Inventive like octopus

Onitsuka strived for perfection and innovation. One of the anecdotes about the origin of the ASICS basketball shoes is that he came up with an inventive idea when eating octopus salad from a bowl. During that diner, a leg of the animal stuck to the side of the bowl. When Onitsuka realized this was because of the animal’s suction cups, he decided to design basketball shoes with tiny suction cups on the sole for more grip. It turned out to be a revolutionary idea.

Another remarkable fact is that Nike-founder Phil Knight started his career at ASICS. When he visited the Onitsuka Tiger office in 1963, he was impressed by the inventive sports shoes and asked Onitsuka to become their sales agent in the US. After a few years working for ASICS Knight decided to start his own sports brand.

The tiger stripes go global

During the years after foundation, the range of sports activities provided by Onitsuka expanded to include a variety of Olympic styles used by athletes around the world. The current ASICS brand signature, the crossed stripes that appear on the side of all the shoes, was first introduced in 1966 during the pre-Olympic trials for the 1968 Summer Olympics in Mexico City. Martial arts star Bruce Lee was the first international celebrity to popularize this design. In 1977, Onitsuka Tiger merged with GTO and JELENK to form ASICS Corporation. Despite the name change, a vintage range of ASICS shoes is still produced and sold internationally under the Onitsuka Tiger label.

In 1977, ASICS opened a first small European office in Düsseldorf, in the home garage of a representative. This German city had a relatively large Japanese community and was centrally located in Europe. In 1995, ASICS Europe, Middle East and Africa (EMEA) relocated to a new headquarters in the Netherlands, from where more subsidiaries were established, and the ASICS network further expanded. The company built and rented several large distribution centers in Europe. In addition, the sales channels broadened from traditional wholesale to opening ASICS stores – first outlet stores, followed by a flagship store and e-commerce. Today, the brand sells all items through omnichannel.

The first implementation of the SAP system involved communication with the bank via the SWIFT platform.

Eugene Tjemkes, Head of Global Business Transformation Finance

Challenge

The implementation of SAP modules

In 2017, to further optimize their treasury function, ASICS Europe decided to implement the treasury management functionality of SAP. “That is when our cooperation with Zanders started”, says Eugene Tjemkes, Head of Global Business Transformation Finance. “The first implementation of the SAP system involved communication with the bank via the SWIFT platform, an in-house cash system with all kinds of automatic entries where Treasury acts as a payment factory – also on behalf of the subsidiaries.”

The Japanese headquarters opted for more or less the same treasury solution as those of the EMEA countries. “The other regions did not choose it, either because of their small size, or since they are single country regions (such as Australia) or because foreign currency plays a lesser role, such as in the US. In Europe, on the other hand, we are involved in currency transactions and hedging every day.”

Treasury as a separate company 

Besides the SAP Treasury and Risk Management (TRM) module, ASICS Europe also implemented SAP Cash Management (CM), SAP In-House Cash (IHC) and the SAP Bank Communication Manager (BCM) in 2017. With this came the decision to set up a new company code that would separate the treasury functionality of ASICS Europe BV (AEB) from its commercial activities, as tax rules only allowed AEB to provide services and do business in Europe. In addition, the new company code, AEB Treasury, ensured global reach and provided cost savings and standardization due to the foreseen treasury activities in the EMEA region, Japan, and the Americas.

Tjemkes explains: “As a legal part of AEB, it was not possible for Treasury to do anything for ASICS US or ASICS Asia. Transforming our treasury functionality into a separate legal entity would make it possible to develop treasury activities outside the EMEA region too. Therefore, there were plans to separate the treasury functionality from the existing corporate structure and make it a global subsidiary of the Japanese headquarters. From that vision, that treasury functionality would be housed in a separate legal entity, we started implementing our treasury system in 2017. The system was set up accordingly; AEB Treasury became a separate company in SAP, although it was not a legally separated entity.”

Bringing back the treasury activities under AEB

However, the plan to service the company’s entities in other regions with an inhouse bank operating from Europe, did not go as planned. Instead, different regions of ASICS were supported with a local solution. And therefore, splitting into two company codes became irrelevant.

Tjemkes: “Due to the separated treasury functionality, the accounting department had to consolidate the reports to get them into one financial statement. After using SAP TRM, CM, IHC and BCM for a few years, we discovered that a legal entity administered in two different company codes appeared to be time-consuming while executing our day-to-day processes. Initially, the plan was to do this temporarily, with the idea that Treasury would become a separate entity. But unfortunately, the plan was ultimately not adopted by the head office – from their perspective the advantages were not that great.”

This left AEB with the artificial situation that there were still two company codes in which it had to deal with all kinds of currencies, with different balance sheet items, and problems with the redistribution results. “That finally made us decide to remove that artificial separation of company codes and bring the treasury activities back under AEB. That also meant an adjustment in our TMS. We asked Zanders to support us in that project.”

Solution

Streamlining Treasury Processes

To solve the shortcomings of the artificial separation, Zanders proposed various alternatives. After conducting a few workshops with the treasury department, it was decided to discontinue all the current processes (TRM, IHC, GL accounting) in the company code representing AEB Treasury and re-implement it in company code representing AEB. Hence, a single company code for the single legal entity.

Magda Bleker, Treasury Specialist at ASICS EMEA: “This would save us time on labor-intensive activities, such as replicating accounting entries into company code representing AEB. Further, as internal dealing only occurred between company codes representing AEB and AEB treasury, ASICS would no longer have to use the internal dealing functionality by merging the two company codes. Removal of these activities would make the processes more efficient.”

Zanders and ASICS identified that the proposed solution would require high implementation effort. It would also lose the flexibility to quickly split the TRM and IHC processes into a new legal entity. However, as the pros outweighed the cons, ASICS decided to go ahead with the merging of the two company codes. The project started with Zanders updating the decision forms, configuration, and master data conversion documents created in 2017 during the SAP TRM and IHC implementation project, which reflected the changes, risks, and implications of migration. After which, the new functionality was configured and tested in a development system, ensuring that it would not disrupt the treasurers’ daily activities and to keep the payment structure intact and valid. Once the configuration had been updated in the system, the previous configuration documents were also updated to reflect the new changes in the system.

This would save us time on labor-intensive activities, such as replicating accounting entries into company code representing AEB.

Magda Bleker, Treasury Specialist

Performance

Improving further

Tjemkes: “Around 2016, we implemented SAP Fashion management system (FMS) ourselves in our European offices as a pilot for the whole world. FMS is an industry-specific solution, and we were the first company to go live with it. In addition to Europe, our branches in the US, Canada, China and Australia, among others, are now on this platform. But to properly implement the treasury system we really needed a specialist. Zanders is a very professional service provider, who knows very well what modern treasury is and how treasury systems work. We couldn’t have done this without them. They did the project management for us, helped write the project plan and created a test plan.”

Despite the corona pandemic in 2020, ASICS had a turnover of 328,784 million yen, which is more than 2.5 billion euro. The company took a great deal to investigate their current processes and see what was working and what was not. Like in sports, ASICS showed how one can still move forward when taking a step back, improving their processes and making them more efficient.

Next step for AEB is to expand its functionality around hedging. “The hedge contracts are now recorded in the system. We want to further optimize the transparency and efficiency of the closing of our hedge deals with banks, to mitigate all associated risks. We also want to improve the valuation of the hedge contracts. There are functionalities in SAP that allow us to better value hedges. But we have already taken many, very important steps.”