1. The weakening of the dollar has been felt in two areas:
a) a reduction in the growth of the group’s earnings arising in dollars when translated into sterling. This exposure is not hedged and the effect is, therefore, carried through to the bottom line;
b) a reduction in the sterling value of dollar-denominated cash flows. This is an exposure that is hedged but over a prolonged period of dollar weakness, hedging can only delay and smooth out the inevitable erosion in value.
2. This depends on the definition of “cash management”. We already outsource much of the transaction processing surrounding payments, receipts and the pooling of cash balances. But all the decisions on the investment and movement of cash balances are still made in-house.
I would be in support of outsourcing more of the low added-value tasks but the core functions, particularly cash forecasting, would need to be kept in-house.
3. By a) taking a more holistic view of business opportunities, in areas such as fund management, pensions services, etc, and not just the high-profile, big ticket transactions (eg bond issuance); and
b) taking a longer-term view of the economics of the relationship; certainly longer than a year.
