Siemens Healthineers

Headquartered in Erlangen, Germany, Siemens Heathineers is a publicly listed healthcare technology group company engaged in the consistent development and innovation of medical products and services, including AI-based application and digitalised products. The company also provides a wide range of service and solutions to medical service providers, contributing to the enhancement of quality healthcare.

Siemens Healthineers entered China in 1899, and has grown into one of the major global R&D and manufacturing centres of the group. With the acquisition of Varian in April 2021, domestic R&D and manufacturing sites have expanded into the cities of Shanghai, Shenzhen, Beijing, Wuxi and Hangzhou. With this, Siemens Healthineers China has become the largest global manufacturing site, producing CT, MRI, X-Ray and ultra-sound machine, surgery, radiotherapy, medical electronics, X-Ray tubes and components, among others.

After the spin-off from Siemens AG and public listing in 2018, Siemens Healthineers began establishing its own global treasury governance function and operational infrastructure. In China, the local treasury operation had historically been centralised with other Siemens business units, meaning treasury activities including liquidity management, currency risk management and trade finance etc. were centrally managed by the designated finance company in Beijing.

A stand-alone treasury meant Siemens Healthineers did not use existing infrastructure and services provided by Siemens in China anymore and without a proper new solution, Siemens Healthineers China entities would be subject to traditional processes for the repatriation of funds, such as dividend payments. In addition, Siemens Healthineers also wanted to adopt a decentralised model that improves the efficiency of daily transactions and liquidity management in China.

The company was seeking a cash pooling liquidity structure that would be highly scalable to support their ongoing China focus and rapid development both throughout Asia and around the globe.

After taking into account the need to reduce transaction costs and leverage surplus cash in China to support global liquidity, HSBC recommended a dynamic RMB domestic and cross-border cash pooling solution that had additional cross-border sweeping eligibility and more flexibility for fund repatriation.

Siemens Healthineers chose a priority sweeping mode where the entity with the most cash surplus serves as the first lender in line to support others that are cash short. This is an optimal arrangement as cash short entities receive the funding they need while others have the flexibility to keep balances at their discretion and the cash rich entity serving as lender enjoys a higher yield.

Operating under a regulated environment, Siemens Healthineers was able to successfully restructure their treasury “stand-alone”. They also took this opportunity to upgrade their operation by connecting Pan-China liquidity and group-level liquidity using a tailor-made sweeping mode that supported daily transactions and cross-border funding mobilisation.

Success

• Improved efficiency through automation: By automating cash pool sweeping on a daily basis and leveraging bank account overdraft to facilitate companywide transactions, manual processes related to intercompany lending/borrowing (via entrust loan mode) has minimised.
• Simplified transaction processes: With a good track record and a comprehensive KYC process, Siemens Healthineers qualified for simplified RMB cross border transactions, where supporting documentation is only required post-transaction on random sample check basis.
• Reduced lending costs: The dynamic sweeping mode meant cash is only transferred to cover intra-day OD from participants with surplus cash balance. This avoided the costlier bi-lateral entrust loan drawdown, which comes with a fixed lending tenor.
• Effective FX management: Leveraging some of the regulatory relaxation taking place in the country, Siemens Healthineers anchored RMB as the main currency in China to initiate intergroup transactions to overseas European entities. FX exposure is centralised and managed at the headquarters level, but the RMB cash pool can still support China transactions and surplus funds can be repatriated quickly.
• Scalable solution to support growth: As they continue to grow, the structure can easily be adapted within China, across Asia and even at the headquarters in Germany. This best practice will serve as the key infrastructure to meet future objectives and multi-currency notional pooling and more.