Worldwide Rollout of Funds Transfer Pricing System
Volkswagen Financial Services AG (VW FS AG) is one of the largest financial services companies in the automotive sector with total assets of approximately EUR 65 bn in 2010 and around 6,800 employees worldwide. About 2,500 employees work outside Germany.
Initial situation and project assignment
The financial market crisis, which was characterized in particular by liquidity shortages, caused a substantial and sustained increase in liquidity costs (spreads), which posed various challenges to VW FS AG from a liquidity perspective. For its international subsidiaries, the controlling concept already implemented was therefore extended to include the explicit consideration of liquidity costs. In order to ensure consistent application throughout the group, this feature was implemented in the operational business of all international subsidiaries in cooperation with zeb. The implementation achieved the following objectives:
- Correct pricing of liquidity costs
- Realizability of the calculated liquidity costs through treasury
- Improved comparability of product profitability
- Separation of the sources of the maturity transformation results into interest and liquidity transformation
Project content and approach
At first, during the concept phase, we established the essential methodological cornerstones. The focus was on the following further activities:
- Methodological concept design
- Development of a software tool for funds transfer pricing
- Selection of pilot markets for testing
- Creation of training documents
Subsequently, we prepared the rollout for the international subsidiaries. In this context, the composition of the two project teams proved to be particularly important.
In the first step of the rollout, VW FS AG initially implemented the extended controlling concept in the pilot markets. The following tasks were carried out on site:
- Survey of the status quo with regard to content, process and organizational design as well as IT implementation (data availability and IT systems)
- Gap analysis and derivation of the need for action
- Preparation of the necessary decisions for the implementation of the extended controlling concept, including
- customization of local IT solutions
- application of the zeb software tool
- specifications or the criteria catalog for the parameterization of non-interest bearing positions
- Training of the relevant employees to build up the necessary specialist know-how in the international subsidiaries
Once the optimization potential identified in the pilot phase had been realized, the extended controlling concept was implemented in a further 18 international subsidiaries of VW FS AG.
The extended controlling concept was implemented uniformly throughout the group in the international subsidiaries, both technically and in terms of processes, in line with the target image. Medium-term planning is carried out consistently for the entire VW FS AG using the extended controlling concept. This enables the company on the one hand to make the right pricing and product decisions at local level, taking liquidity costs into account, and on the other to allocate liquidity to the business segments according to optimal benefit-cost ratios at a centralized level.