UniCredit: Open the Gate to Cross-Boarder Expansion - Bettina Cast and Veronique Porr




Expanding globally often presents corporates with costly technical and bureaucratic challenges. Bettina Gast of UniCredit and Veronique Porr of German jewellery retailer Bijou Brigitte tell Rod James about how leveraging UniCredit's global banking network, coupled with maintaining a collaborative corporate bank relationship, is the key to process simplification.

Over the past three years a number of European companies, particularly in the retail sector, have had to rethink their strategies for cross-border expansion. Low consumer confidence and a tight credit environment have put the brakes on growth, with many companies choosing to consolidate their core markets. There are, however, exceptions.

Bijou Brigitte is a market leader in the European jewellery and fashion accessories sector, with a network of more than 1,100 shops in Germany and beyond.

After having built up a strong presence in Central and Eastern Europe, it continued its expansion into the region during 2009, despite the economic crisis, opening up branches in Lithuania, Slovakia and Bulgaria

Continued store growth led to group sales rising by 3.8% in 2009 from €375.7m to €390.1m, bucking a regional trend. However, despite the company's ability to weather the economic storm, expansion is still littered with obstacles.

"The bank uses standardised request forms in combination with a structured referral procedure to help expedite the process of opening a business overseas."

Although all payments are controlled centrally from the company's Hamburg headquarters, every new store Bijou Brigitte opens requires a bank account with a domestic institution. This bank has to possess strong local knowledge and be able to deal with domestic regulatory and technical challenges, while meeting the requirements of the retailer.

In addition, Bijou Brigitte needs an extensive branch network within its country of operation to manage cash deposits from the companys' point of sale (POS) terminals. According to Veronique Porr, Bijou Brigitte's finance director and the person charged with setting up new subsidiaries, UniCredit was the obvious choice of banking partner.

UniCredit is the largest international banking network in Eastern and Central Europe, with 4,000 branches throughout the region. The strength of its reputation is, according to Porr, one of its main assets and helps to scythe through often thick layers of regulation.

"Its local knowledge is very useful," she says, "but its name is also important. The local bank might not know us so it's vital that we deal with a group that is well recognised. This speeds things up considerably and greatly reduces the amount of paperwork." In addition to bureaucracy, technological issues are another challenge. POS terminals in shops often have to be registered by a country‘s tax authority, requiring unique technical specifications, and credit card terminals must be similarly customised to allow for effective cash management. These hardware-related challenges, language difficulties and often slow administrative functions can make opening a new branch a laborious process.

"The foundation and registration of a new firm by the authorities require a lot of documentation that is always different depending on a country's regulations," Porr explains. "We have to spend a lot of time researching what forms are needed and from which authorities we can obtain them." 

UniCredit can help a company with this. Supported by its relationship managers in the client's home country, the bank uses standardised request forms in combination with a structured referral procedure to help expedite the process of opening a business overseas. This makes redundant the need for a client to be physically present in the target country.

"We derive a lot of information from UniCredit about the new country; we learn which banks to use, about credit card systems, and the local electronic banking system," Porr explains. "We receive all this information in standardised summary sheets and we work very effectively with these papers." 

UniCredit combines this local knowledge with an array of crossborder banking resources. Its pancontinental transaction service, EuropeanGate, gives companies such as Bijou Brigitte online access to all banks within the UniCredit group while allowing them to manage their various accounts through a single node. The service can be linked to any existing e-banking solution and is accessible from all branches, providing a secure mechanism that can take payment orders, transfer them into national formats and forward them to another bank in the network for execution.  

"These services make our e-banking system a little more attractive, as you get all you need in one system," says Bettina Gast of UniCredit. "We offer a one-stop shop which means it's not necessary for our clients to contact banks directly." UniCredit also allows its clients to directly transfer marked payments from their own accounting systems, making for a more joined up transaction process.

"Either they can transfer the file manually or via a direct link, so there is no break between their accounting system and electronic banking system," Gast explains. "Security and compliance requirements can also be easily met in this way."

As well as sparing a client the time and hassle of having to travel to a target country, EuropeanGate helps companies such as Bijou Brigitte keep a handle on all of their overseas arms once operational. It provides a centralised data structure, allowing firms to access the account information of all their subsidiaries at any time.

The bank's membership of the IBOS network further broadens this geographical and operational scope. "We can now view daily statements of our subsidiaries, making it easier to provide liquidity management for the whole group," Porr says. "We are becoming a daily reporting company."

The SEPA challenge

One of the drivers of UniCredit's cross-border banking service is its MultiCash e-banking software. It allows domestic and foreign orders to be placed in the local country's format, regardless of the company's location, and allows for payments to be authorised on a multi-level, multi-regional basis. Although a majority of Bijou Brigitte's payments are in the MT101 format, exceptions such as orders from the UK, which are partly in BACS form, can be dealt with.

Looking ahead, banking formats will continue to be a major issue. SEPA will help bring down barriers between pan-European businesses, aligning the cost of cross-border transactions with that of domestic electronic ones by using European-wide XML formats. UniCredit is fully SEPA-enabled.

"UniCredit is the largest international banking network in Eastern and Central Europe, with 4,000 branches throughout the region."

"We offer the customer the option to create a SEPA payment," Gast explains. "Up to €50,000 is in line with the cost of a domestic payment, improving convenience and efficiency for the customer." At the moment, SEPA has a number of operational kinks that banks are trying hard to get straightened out. Many systems are still unable to handle the SEPA format and have to carry out the necessary conversions in a timeconsuming and costly process.

"A big challenge for corporates is the SEPA format," Gast explains. "Customers have to be able to create a new format instead of the local type, and it's not realistic to handle all the payments in the international format. Some accounting systems cannot manage and are in need of an expensive upgrade."

In addition, the cost-saving opportunities that SEPA brings could work to the detriment of banks such as UniCredit over the long term. With customers being able to save costs on lower-value transactions, competition for those of a higher value will become fierce and banks will have to up their games accordingly.

"Fees on transactions of above €50,000 have to be negotiated with the bank and customers are beginning to compare prices," Gast says. "We have to make sure that we can offer a good price in the face of increased competition from other banks." UniCredit knows that the best way of keeping customers in an increasingly competitive environment is by fostering strong client relationships. Porr sees her company's already solid relationship with the bank growing in strength. 

"When we call, we don't have to explain ourselves. They know what's wrong and can assist us quickly," she says. "I think that our relationship will become closer and increase in efficiency as knowledge of our operations grows."

Veronique Porr of German jewellery retailer Bijou Brigitte.
Bettina Gast of UniCredit.