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Cash Management in the Baltic States

Cash Management in the Baltic States. 200 4. Agenda. Overview on CM market in the Baltics Possibilities to manage Liquidity CM Solutions Treasury Solutions How to Ensure Efficient CM process. Payment Structure Non-Cash Payments (number of transactions) % Baltic Region 2004 IIQ.

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Cash Management in the Baltic States

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  1. Cash Management in the Baltic States 2004

  2. Agenda • Overview on CM market in the Baltics • Possibilities to manage Liquidity • CM Solutions • Treasury Solutions • How to Ensure Efficient CM process

  3. Payment Structure Non-Cash Payments (number of transactions) % Baltic Region 2004 IIQ Source: Central Banks of Lithuania, Latvia, Estonia June 2004

  4. Payment Structure Non-Cash Payments (number of transactions) % Nordic region Source: ECB Blue Book August 2002

  5. Usage of Non-Cash Payments Baltic Region

  6. Clearing in the Baltics ESTONIA LATVIA LITHUANIA • EEK through DNS system (file transfer) or RTGS (SWIFT) • No float for domestic outgoing payments if submitted to the bank before cut-off time of last clearing • No float for incoming payments • International payments: • normal (T+2) • urgent (T+1) • express (T+0, EUR, USD only) • EU payments • LVL through Net Clearing System (EKS)or RTGS (SAMS) • 1 day float for normal domestic outgoing payments. • No float for urgent domestic payments • No float for incoming payments • International payments: • normal (T+2) • urgent (T+1) • express (T+0, EUR, USD only) • EU payments • LTL through Clearing Centre or RTGS • No float for domestic outgoing payments if submitted to the bank before cut-off time • No float for incoming payments • International payments: • normal (T+2) • urgent (T+1) • express (T+0, EUR, USD only) • EU payments

  7. Cash Pooling in the Baltic Region ESTONIA LATVIA LITHUANIA

  8. Legal issues related to Cash Management set up ESTONIA LATVIA LITHUANIA • No legal obstacles for local or cross-border cash pooling. • No legal obstacles for local or cross-border cash pooling. • No legal obstacles for local or cross-border cash pooling. • Cross-border intra-company lending / borrowing is a subject for withholding tax. • Additional reporting required to Central Bank if cross-border borrowing / lending occurs.

  9. Liquidity management Current account T-bills Time deposit Money market funds Automatic overnight deposit

  10. Currency risk ESTONIA LATVIA LITHUANIA • Currency - Kroon from 1994. • Currency board. Peg to Euro. • ERM2 June 2004 • Developed market of FX derivatives for currency risk management. • Curency - Lats from 1993. • Fixed exchange rate (+ - 1.0%). Peg to SDR. • Peg to Euro and ERM2 Jan 2005 • Developed market of FX derivatives for currency risk management. • Currency - Litas from 1993. • Currency board. Peg to euro (since February 2002, earlier USD). • ERM2 June 2004 (Government committed that EUR/LTL rate will not be changed till Euro will be launched in Lithuania). • Developed market of FX derivatives for currency risk management.

  11. Other Cash Management products available in the Baltic Region Internet Bank PC Bank SWIFT Bank Office • Banking transactions through Internet 24 hours a day • Information on current, term and securities accounts • Balance reporting • Information on bank cards transactions and limits • Credit information • Domestic and international payments • Securities transactions • Pin calculator • Banking transactions through PC Bank 24 hours a day • Information on current and term accounts • Balance reporting • Information on bank cards transactions and limits • Credit information • Domestic and international payments • Pin calculator • MT 101, 940 • Straight Through Processing has the highest priority • Access to the local clearing • Domestic and international payments • Statements and balance reporting • The most extensive branch network in the Baltics • Advisory • Client Executives

  12. March March One-point-of-entry to the true ability to handle liquidity management in the Baltic market BALANCE REPORTING • MT940 (daily/weekly/monthly/after every transaction) FOREIGN BANK S E B Edifact Parent company Cash • by MT101 PAYMENTS

  13. Customer Services Who is involved: Base case: local service under a central service level Flexibility in service set up, according to agreement and business case

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