ternational treasury. Larger multinational firms will often possess such a large num-
ber of foreign subsidiaries and affiliates that they are frequently managed both on the
regional level (in this case Western Europe and Latin America) as well as by the basic
functions (cash management, foreign exchange, and foreign exchange risk manage-
ment). Regional treasuries are often needed as an intermediate step between the
sparsely staffed foreign affiliate, its dependence on other regional affiliates, and the
needs of the parent to coordinate and centrally manage financial and operational ac-
tivity.^4 However, there is frequently a duplication in responsibility and activity, both
between the regional treasury offices and global cash and foreign exchange manage-
ment, as well as between international treasury and the other first level treasury man-
agement activities such as cash management and capital markets.
As firms expand and evolve, the nature of the individual industry of the firm, or
the corporate goals of the specific firm, may require that specific treasury functions
evolve and expand more rapidly than others.
- U.S.-based multinationals with manufacturing operations in the U.S. territory of
Puerto Rico, a special office or director of Section 936 tax management regard-
ing the specific tax benefits under the U.S. internal revenue service code section
936 often are required. - Firms with substantial cross-border trade or payments with firms domiciled in
nonconvertible currency environments may require a full-time staff member de-
voted to countertrade and other nonmonetary exchange business lines. - Firms involved in large scale capital intensive projects financed with heavy par-
ticipations of debt, may create entire treasury staff expertise in project finance.
5 • 8 INTERNATIONAL TREASURY MANAGEMENTExhibit 5.3. Modern Treasury Organization.
(^4) For North American-based multinational firms, it is not uncommon to have intensive subsidiary op-
erations in Western Europe and Latin or South America. Regional treasuries representing these activities
are therefore common and heavily utilized due to commonality of time zones and market activity. The
Far East or Asian Pacific, however, is uneven in industrial and financial market developments, causing
many of these same multinationals to manage these individual affiliates on a selective basis, although
rarely from the parent office direct.