With a 68% increase in revenue since 2003 in Europe, the Middle East and Africa (EMEA), Honeywell International Inc. took steps to more tightly manage its growing business. Over those five years, acquisitions had added more than 500 bank accounts and more than 100 legal entities. Cash balances for EMEA grew to over $1 billion held in 20 currencies.

So treasury embarked on a campaign to choose just one primary bank per country. In-country cash pools were used to concentrate cash balances in each country. Notional pools were used in the U.K. and the Netherlands and a cross-border pool with Deutsche Bank AG was established for the 10 Euro countries. When possible, cash from these pools was lent back to Honeywell's in-house bank in Belgium and then "hedged back to the local currency of the lender and either invested or used to finance non-U.S. capital investments and acquisitions," explains Marie-Astrid Dubois, assistant treasurer for EMEA and Asia. Today that in-house bank can lend or borrow in 18 currencies with over 100 counterparties in more than 30 countries, running a gross book of about $4 billion in activity, she says.

The rationalization has brought a net reduction of nearly 600 bank accounts, better service and a 50% reduction in cash management fees, saving the company approximately $2.7 million per year. Now virtually all of Honeywell's cash balances in the region come under the partner banks' cash pools and in-house bank structure, resulting is high visibility of cash and more efficient use of that asset. "Over 90% of EMEA's cash balances can be deployed cross-border in a tax-efficient manner to fund liquidity and acquisitions as needed, of which over 90% is managed directly by EMEA treasury personnel," Dubois says. That has meant a 25 basis-point pickup in investment return and a source of funding for most of Honeywell's acquisitions in the region, she adds.

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