UniCredit case study:
Buongiorno
Mobile media and technology firm Buongiorno thought it was impossible to find a cash pooling
solution to meet its needs. Working with UniCredit, it was able to meet all of its goals across Europe
Buongiorno is a dynamic, independent mobile media and technology company driving the burgeoning mobile content industry. It has
become the world’s number one company in mobile entertainment
– active in 57 countries – and the market leader in Europe and Latin
America with 80% of the revenues coming from international sources.
provide the relevant services and manage a widespread sales team. In
Italy we cover the market with coordinated specialized teams, assisting
customers in every transactional they express. Buongiorno, for example,
is assisted by myself and Vittorio Gariboldi”
Directly and indirectly, Buongiorno reaches more than 300 million
consumers, and it has over 9 million subscribers to its B2C services.
The company’s scale, geographical presence, unrivalled portfolio of
content and services, and flexible strategy, executed by an expert team
of more than 1,000 professionals in 24 offices around the world, make
Buongiorno the world’s largest enabler of mobile content and digital
entertainment.
Spurred on by UniCredit’s firm belief that a multi-country cash pooling
structure with a daily sweep was possible for Buongiorno, the company
set out to find a suitable bank to design a solution. “We reviewed our
list of bank counterparties and looked closely at their proposals,” says
Buongiorno’s Elmosi. “We determined that UniCredit was best positioned to meet our requirements. Moreover, we have a strong existing
relationship with UniCredit and were happy to choose it, given that we
are an Italian company.”
Despite such an internationally focused and technologically sophisticated business model, Buongiorno, which is publicly traded on Borsa
Italiana’s MTA Star exchange and had revenues for 2009 of €259 million,
had until recently to rely on decidedly basic technology to move cash
between its European companies. “Buongiorno simply performed cash
sweep manually on a weekly/monthly basis to the central treasury in
Italy,” explains Gianluca Elmosi, group treasurer at Buongiorno.
Not only was this arrangement cumbersome and time-consuming
for Buongiorno treasury staff, it also limited the company’s ability to pay
down its debt in accordance with its amortization plan. Most of Buongiorno’s revenues are generated abroad, while its financing is organized
in Italy and relates to the parent company. As cash was being transferred only once a month, Buongiorno was effectively missing out on
part of the benefit that improved cash balances could have delivered to
the company if held in Italy.
“Buongiorno continued to perform manual monthly transfers of cash
from its European operations not because it wanted to but because it
could not see a viable alternative,” says Elmosi. Indeed, the search for an
alternative was only sparked by a comment made by Buongiorno’s CEO,
Andrea Casalini, who declared at an Aspen Institute meeting that “no
Italian bank had been able to provide a cross-border pooling system” to
meet his company’s needs.
“Buongiorno’s needs remained unmet possibly for a number of
reasons,” says Stefano Gemelli, head of international cash management
sales, Italy, Global Transaction Banking, at UniCredit. “Firstly, despite the
global nature of Buongiorno its local entities have relatively thin structures, so the size of the company meant that global transaction banking
players were uninterested in serving it. Secondly, the Italian market
is still relatively unsophisticated – just a few banks are really able to
Choosing UniCredit
UniCredit’s solution for Buongiorno is unusual. It requires very low
intraday limits, because, as already noted, the company’s local entities
have thin structures. To implement the solution in the countries where
Buongiorno operates, UniCredit made use of its own footprint and the
flexibility offered by its membership of international banking alliance
the IBOS Association.
IBOS is based on its 12 members and their subsidiaries, each of which
is a leading supplier of local banking services in its domestic markets.
It consists of competitive local services at the IBOS bank in the country
concerned and the meshing of local services into regional, multi-country cash management arrangements using IBOS cross-border services.
“UniCredit’s core strength is in Central and Eastern Europe but
through its membership of IBOS, Buongiorno has access to marketleading local services in Spain and France, for example,” explains
Gemelli at UniCredit. “From Buongiorno’s perspective the relationship
is solely with UniCredit and we maintain standards and seamlessly
integrate with the local bank on the ground.”
Implementation of the cross-border cash pooling structure began
initially in Italy and Spain in 2010 followed by France and Austria. Germany is expected to join the structure during the first quarter of 2011
and Portugal will be added during the first half of the year. “At that time
we will have six countries in the pooling structure and will be making
significant inroads into Buongiorno’s European operations,” says Elmosi.
The company plans to have eight countries implemented – all euro
members – by the end of 2011.
Thanks to Unicredit Service model we were able to talk just with
one Cash Management focal point and implement several countries
without the problem to align several people or discuss implementation
with several units. Benefits for Buongiorno
Buongiorno has benefited from cost savings and an improved
financial structure as a result of UniCredit’s cross-border cash pooling
structure. “At the most simple level, we are saving around a30,000
every six months on commission through automatic sweeping,” says
Elmosi. The company also gains from improved interest rates as cash
is now centralized in Italy.
At the same time, automatic sweeping has improved risk management because there are no manual processes involved in moving
cash, reducing the potential for error or fraud. “There have been no
savings in terms of personnel because the number of transactions has
remained the same – they are just being conducted at master pool
level in Italy,” says Elmosi. However, the cash pooling structure does
mean that treasury staff are able to concentrate on the more important header account rather than working on country accounts.
An additional benefit of the multi-country cash pooling structure
is a rationalization of Buongiorno’s banking relationships. “Given our
history it has always been natural for the company to centralize its
accounting, cash and banking relationships in Italy,” says Elmosi. “In
countries where cash pooling has been implemented we have been
able to close almost all accounts with banks other than UniCredit.”
In some countries, such as Spain, it has proved necessary to retain
accounts with other banks to maintain existing non-recourse factoring arrangements. “Nevertheless, even in Spain, Buongiorno has been
able to reduce the number of accounts it held from eight to just
three,” says Elmosi. “Overall, after just four months of implementation,
we have been able to close more than 30 accounts.”
Enhanced communication
By reducing the number of bank counterparties that it works with,
central treasury staff at Buongiorno can more easily manage their
banking relationships. “It’s great just to have to speak to one institution,” says Elmosi. “A total of 60% of our cash is now collected by UniCredit, so by communicating with them we have almost a complete
view of our cash situation at any time. For myself and the CFO this
saves a lot of time and effort.”
By concentrating most of its European business with UniCredit,
Buongiorno also gains the maximum benefit from the bank’s monthly
reporting, which is sent automatically. “It allows us to look at all
transactions across all our accounts for all entities in all countries in
the cash pool,” says Elmosi. “It means that we can make an immediate
assessment how much cash must be liquidated to meet our
interest payments.”
Gianluca Elmosi, group treasurer, Buongiorno.
UniCredit
UniCredit is a major international financial institution with strong
roots in 22 European countries and an international network in
approximately 50 markets, with 9,600 branches and more than
162,000 employees.
UniCredit has the largest international banking network in the
CEE region with around 4,000 branches. The bank operates in
Austria, Azerbaijan, Bosnia and Herzegovina, Bulgaria, Croatia, the
Czech Republic, Estonia, Germany, Hungary, Italy, Latvia, Lithuania,
Kazakhstan, Kyrgyzstan, Poland, Romania, Russia, Serbia, Slovakia,
Slovenia, Turkey and Ukraine.
Global Transaction Banking
Global Transaction Banking at UniCredit combines the local
expertise of over 2,000 professionals with the knowledge and
experience of a truly sophisticated global transaction bank. Its
diverse and proven set of core competencies in the fields of cash
management and electronic banking, trade finance, supply chain
finance, structured trade and export finance and global securities
services has won widespread recognition, as demonstrated by the
many international awards Global Transaction Banking regularly
receives.
For further information, please contact
Stefano Gemelli
Head of International Cash Management Sales, Italy
Global Transaction Banking
UniCredit S.p.A.
Via Tommaso Grossi 10
20121 Milano, Italy
Tel: +39 02 8862 3579
Fax: +39 02 700 430951
[email protected]
www.unicreditgroup.eu
UniCredit • Case study: Buongiorno
“The most important benefit of the centralization of Buongiorno’s
cash in Italy is its effect on our debt,” says Elmosi. “Our revolving debt
facility is subject to repayment when cash is available. Consequently,
by centralizing cash we are both saving commission and reducing the
amount of interest the company pays.”
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