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Defined pension deficits have been in the news in the UK recently, from several aspects. Firstly there is much talk about how they will be closed to new entrants almost universally and the effect this will have on staff.
Transfer pricing is the issue that arises when transactions between companies in a group might give rise to distortions in the tax payable in different jurisdictions. It is easy to see that an export made from a high tax regime at, say, cost price will deprive the country of tax revenue.
In our studies we have seen how some techniques are available to treasurers to manage cash around their groups and these include the cash concentration techniques of notional pooling and cash concentration itself, in the form of zero or target balancing. It is worth stopping to think how important the whole issue of cash management is for a group.
There are two vital factors about a company today: how it went into the downturn and how it goes into the upturn.Going into the downturn, the ACT produced a treasurer’s guide. Since the Annual Conference in the spring however, we have been thinking about the upturn.
In recent months we have heard senior politicians from all three parties say better, not more regulation (of banks etc) is needed – so why are we all worrying about the form of regulation and more regulation rather than better regulation? Because those saying it aren’t the decision makers in Government!
The ACT tends to take to look at the two subjects of interest rate risk and refinancing risk in separate buckets.Thus when we talk about interest rate risk we usually talk about the risk in the movement in benchmark rates, such as LIBOR or treasuries or gilts, and the effect of those on one or more of three things, namely the interest income or expense, or the effect on interest bearing assets and liabilities, such as pension scheme bond assets or pension liabilities, or the effect on the business economically caused by rising or falling rates.
Many firms with bank borrowings in the form of committed facilities have considered themselves fortunate in the credit crunch that the maturity date of those facilities was far away enough in the future that by the time they needed refinancing, the crunch would be history.
The Payment Services Directive (PSD) should be in force across Europe by 1 November 2009. This directive is a very wide ranging piece of legislation and has even been adopted by the European Economic Area (thus including Iceland, Norway and Liechtenstein) and Swiss banks also plan to adopt the terms.
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