Micron Technology is a US producer of computer memory and computer data storage with a presence in more than 17 countries. Occasionally, the company needs to move very high value payments through multiple countries to an extremely tight timeline. It is imperative that these payments should not be late and as HSBC is Micron’s main cash management operating bank in Asia, the company naturally turned to HSBC for support in coordinating these transactions.
The relationship between Micron and HSBC started in 2010 when HSBC won the mandate for the company’s Asia cash management business. Since then, the relationship has become increasingly consultative, to the extent that in June 2017 when Micron needed to start moving same day payments of USD1bn+ across several time zones quickly (in a maximum of eight hours) it turned to HSBC to help address the challenge.
The high value payments were not frequent – perhaps occurring only two or three times a year, or even less. However, each payment might have to move through 5+ bank accounts belonging to Micron business units in five or more countries – plus multiple bank nostro accounts. Furthermore, these countries – including among others the US, UK, Singapore, Taiwan and Japan – were in most cases in different time zones from each other. A further complication was that high value payments of this nature would usually trigger scrutiny by the bank’s compliance department because of regulatory requirements in the various jurisdictions. This, plus fraud checking, would obviously risk significantly delaying the payments, which in view of the tight timeline was unacceptable. Finally, the payments might vary in terms of the number of entities/countries involved, so any solution would need to be able to deliver a consistently positive result under changing circumstances.
The payment tools to fulfil the payments – HSBCnet and priority payment – were quickly determined. However, the major challenge would be in coordinating multiple different areas within the bank across multiple time zones. HSBC teams from the following disciplines would all need to be involved:
- Overnight payment monitoring
- Offshore payment monitoring
- HSBCnet Fraud
- Global Liquidity and Cash Management Service
- Global Liquidity and Cash Management Sales
- Relationship Managers
- Balance sheet managers
Preparatory calls were held for all these teams in advance of each payment, often involving different individuals in each business unit. All participants then confirmed – both verbally and in writing – that they had completed the necessary due diligence and that they had also fully briefed a suitable deputy in the event they were themselves out of the office on the relevant date. A formal hand off process was agreed along with the relevant confirmations/acknowledgements, so there was 100 per cent clarity over whose specific responsibility a payment would be at any given moment. This also ensured complete transparency as to the real time status/progress of any payment.
Particular provisions were put in place for the compliance and fraud teams, who were notified in advance of all the details of each payment to ensure it was not delayed by checks. The overnight payment monitoring teams were also put on alert. In addition, very substantial credit limits were put in place as a contingency. This was to ensure that if for any reason there was a delay in the payment leaving a bank nostro account at any point, sufficient funds would be still be available in the final client destination account at the end of the entire payment process.
In view of its global network and the requirements of its multinational clients, a high degree of international and interdepartmental collaboration is the norm at HSBC. Therefore, while the requirements relating to these payments were stringent, the necessary internal processes were already in place to ensure that multidisciplinary teams could quickly be assembled as required for each payment. Another HSBC advantage was that all HSBC countries use the same wire system, which ensures 100 per cent global visibility at all times to all relevant HSBC personnel, regardless of location or time zone.
In view of its global network and the requirements of its multinational clients, a high degree of international and interdepartmental collaboration is the norm at HSBC.
To date, HSBC has processed several of these complex high value Micron payments. All have completed successfully and comfortably within the specified time limit. “HSBC was proactive in quickly appreciating the importance of these time-critical payments to Micron and in structuring a robust process that ensured the payments always arrived comfortably within the deadline,” says Lance Kawaguchi, Managing Director, Global Head – Corporates, Global Liquidity and Cash Management, HSBC.
Adit Gadgil, Managing Director, Global Sector Head – Technology, Global Liquidity and Cash Management, HSBC adds: “By leveraging our payments infrastructure, channel connectivity and a dedicated West Coast technology sector team, Micron Treasury is able to achieve seamless, around the world payments and meet a key global liquidity management objective.”
The successful processing of these critical Micron payments has further served to foster the consultative and trusted relationship between the company and HSBC. It has also underlined what it is possible to achieve through collaborative working, both between client and bank, but also across disciplines within the bank.
For more information on how HSBC can help meet your needs please contact your local HSBC representative or visit gbm.hsbc.com
Published: December 2019For Professional clients and Eligible Counterparties only.
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