Central And Eastern Europe: Delivering Consistency

Banks and fintechs want to make treasurers’ lives a lot simper.

Comprising 12 countries, as well as different currencies and regulatory requirements regarding the movement of capital, corporate treasuries located in Central and Eastern Europe (CEE) need banking partners that can provide the most efficient and effective payments and cash management structures.

When looking at how to manage corporates’ liquidity in CEE, the most important factors are the heterogeneity of regulations and legal and tax constraints across the different countries, says Marco Esposito, UniCredit’s head of Global Transaction Banking in CEE. “Some countries in the region are open to cross-border cash pooling, some are not, and others are in a gray area where pooling is not yet regulated. In such cases, each corporate must rely on their bank’s capabilities.”

Esposito believes notional pooling—in which credit and debit balances in different accounts are bundled together, without any physical transfer of funds, for interest-calculation purposes—may provide a way of solving issues related to intragroup transfers and loan generation. “Such structures are technically feasible,” he explains, “but they come at a high cost, in particular due to Basel III requirements. That is the reason why it is mainly affordable for large corporates only.”

Despite the different legal frameworks for cash pooling across the region, Cédric Derras, global head of Cash Management at UniCredit, says the bank has seen concrete efforts to enhance integration and increase efficiency. European Union regulations such as the Single Euro Payments Area (SEPA) and EU Directives on Payment Services, which state that any cross-border euro transfer must be priced the same as a domestic transfer, have brought greater regulatory harmonization to the region.

Banks are also looking to simplify things for corporate treasurers doing business in multiple jurisdictions across the region. “Banks are offering customers more homogeneous services,” adds Derras, “such as single account-opening forms, as well as single entry points, e-banking tools and easy connectivity.”

Susanne Prager, head of Cash Management at Raiffeisen Bank International (RBI), also highlights regulatory requirements such as the revised Payment Services Directive, or PSD2, and the Anti-Money Laundering Directive (AMLD). “Next to that, the impact of Interbank Offer Rates (IBOR) changes will affect corporates on the interest rate landscape,” she says. Instruments that reference IBOR are being phased out in favor of Alternate Reference Rates. Prager says treasurers looking to optimize their cash management and treasury operations can benefit from file-format harmonization in the form of SWIFT’s Common Global Implementation (CGI) initiative, which promotes wider acceptance of ISO 20022 XML in corporate-to-bank implementations.

SWIFT’s global payments innovation (gpi) could be another game-changer for both corporates and regional banks in CEE. “SWIFT’s gpi indicates the dawn of a new era in international payments, making increased transparency and same-day use of funds the new standard,” says Prager, adding that RBI was one of the first banks in Europe to offer this new service in 2018. Prager says corporate customers appreciate the payment-tracking function available under gpi. “As more banks join the standard and additional currencies become available, the appetite for SWIFT gpi will increase further,” she says.

Many governments in the region are also looking to attract fintech talent and Western European banks are using it as a test bed for innovation. Start-up data-tracking platform Tracxn states that as of 2016, CEE is home to more than 600 fintech companies, with more than 50% of them working in payments or financing.


Best Overall Bank for Cash Management Raiffeisen Bank International
Best Bank for Liquidity Management UniCredit
Best Bank for Payments and Collections UniCredit
Best Provider of Short-Term Investments/Money Market Funds Raiffeisen Bank International