Perry Savundranayagam, Executive Vice President – Treasury and Investment Banking at Nations Trust Bank, discusses how the bank is constantly transforming a traditionally inward-looking treasury model into a frontline unit. Nations Trust Bank Treasuries is helping clients to make sense of financial markets, contain risks, manage wealth, and discover new growth opportunities.
Can you take us through the primary purpose and function of Treasury Operations in a typical bank? How is Treasury viewed at Nations Trust Bank?
Treasury is a critical function of any bank. There are two aspects to treasury operations in the traditional sense: managing risk and liquidity. Comprising financial market professionals, a treasury department manages various market risks for diverse asset classes that confront a bank. On the liquidity side, treasuries maintain optimum levels of liquidity to satisfy customer needs and ensure banks are sufficiently liquid and meet regulatory requirements.
Over the last 20 years, treasuries have become more customer-oriented. Today, they also help clients manage their market risks through various risk management solutions and strive to generate maximum returns for shareholders and clients through this process.
As an emerging economy, treasuries in Sri Lanka are basic in their product offering given the size and the depth of the market. Nations Trust Bank, however, is hoping to challenge those perceptions.
At Nations Trust Bank Treasury, we have relationship managers who deal with corporate clients directly. We provide solutions and thought leadership around managing risks, from interest rate movements to currency fluctuations, and external macroeconomic developments. We help our Treasury clients to identify the driving forces that will influence their balance sheets and how best to identify and manage them. Apart from these, we are also building wealth management solutions for our clients, so the Nations Trust Bank Treasury is moving beyond the realm of risk management to creating growth opportunities for our clients.
How is Treasury adding value and unlocking opportunities for Nations Trust Bank’s clientele, a diverse group of businesses and individuals, especially during the unfolding pandemic?
We are fortunate to have a diverse client base that allows us to vary our product solutions which in turn provides us with an opportunity to give them better returns and competitive pricing, and we are leveraging our strengths in funding and risk management to do so. We provide insights on risk management and guidance on how to endure market challenges like extreme volatility, economic cycles, and external shocks.
The client base includes large ticket corporates and a significant number of small and medium businesses we engage through our island-wide branch network. We also have a growing private banking portfolio and an institutional banking clientele which includes several non-bank finance companies.
As an emerging market, we are subject to regulatory limitations on the types of financial products that we can offer on the risk and wealth management front. However, in many ways, we have created opportunities to do more for our clients by making sure that we support them through tough times. We are living amidst an unprecedented global pandemic, and the economic repercussions are severe. In that context, our ability to help our clients make sense of the market is perhaps our most significant contribution.
From a market and corporate perspective, one of the main things that we are committed to is discovering funding opportunities for our clients, and we have managed to do successfully across our diverse client base. We do this in two ways. First, we have a strong customer relationship management team on the ground with a strong branch network and the ability to reach out to clients from large corporates to SMEs. Second, we are leveraging our strengths to unlock financing opportunities for our clients. We are in a position to attract investment even during the most challenging of times.
An indication of this is our successful debenture issue earlier this year. The bank offered debentures worth Rs3 billion with an option to raise a further Rs1 billion upon oversubscription. Investor confidence in the bank is so strong that we were overwhelmed by their response. The debenture issue was oversubscribed and closed on the opening day, and we ended up attracting applications worth a little more than Rs5 billion.
We are proud of what we have achieved for our clients during the unfolding Covid-19 pandemic. For example, we provided low-interest special credit schemes to clients. That comes partly from our ability to leverage market opportunities. Over the years, we have forged relationships with various international funding agencies that continue to engage and invest in the bank to finance segments that need low-cost funding the most. Earlier this year, the bank partnered with FMO, a Dutch enterprise development bank, on a $40 million loan arrangement to provide SME support.
What makes the bank’s Treasury offering unique, and what are your plans for the future?
Our diversified client base is our strength because it gives us a unique view of the real economy and its parts. As a result of our deep relationships with our clients, we have unique insights into different industries and how companies, both big and small, operate. Combined with our expertise in financial markets, we have a powerful formula to help our clients approach risk management in a holistic way, which includes finding opportunities and investing for future growth.
The bank has a strong culture of collaboration and teamwork. Every unit and all teams across Nations Trust Bank are aligned to a single vision and work together to ensure that our client requirements are met at every level. That level of teamwork and collaboration is a big strength that allows the bank to move forward much faster and smarter.
We will expand our risk and wealth management offering by creating innovative products, including derivative instruments, for our corporate and personal banking clientele. The opportunity to grow this segment is considerable, and that will be our focus. The bank is committed to innovation and investing in a digital transformation, so our treasury and wealth management solutions will be faster, more secure and create delightful experiences for clients.