Being Open to Change and New Challenges with Thomas Böttger

Foreign.

To this week's Treasury Career Corner podcast where I interview treasury professionals about their treasury careers. Each and every week I talk to them about how they've built their careers, where they are now, where they see both themselves and the treasury profession going to next. Let's get on with the show. This week's show, delighted to be joined by Thomas Butger, the global head of finance and insurance at Covestro. Covestro is one of the world's leading manufacturers of high quality polymer materials and their components, innovative products, processes, methods, company enhances sustainability and quality of life in so many areas. But I'm not going to talk about that. I'll get Thomas to explain that a bit later on in the show because there are so many different key industries that they supply to. But I actually want to get through his treasury career, talk about his background and how he eventually got to this role. So Thomas, if you would take us back to the beginning and how you first got started in finance and then Treasury. Take us back over to you, sir.

Hi Mike, and thanks for having me. Lovely to do that intro. Let's say how did I start in finance? I'm an economist by profession and at the end of my studies I did an internship at a bank and that that catched my attention. It was so interesting to work in finance. I finalized my economic studies but I took a lot of finance courses at the end of my studies. The main focus of my studies was how to let state owned companies be privatized. So I came to the idea because that was at the time where that happened a lot in Germany as well. I came to the idea why not combining both go into a company which is exactly in this situation to be privatized. However, I'd like to work in finance and that's what I did. I joined Deutsche Post at the time and that was essentially a very good idea because a lot of things needed to be set up at the time. And I always say in the first five years of my work experience, I've collected the experience and worked in finance projects with which you usually collect over the lifetime of a professional career. So setting up interest rate management, cash pools, large M and A transactions, implementing an EMTN funding program, working on the relationship and establishing the relationship with rating agencies, have an own IPOs for subsidiary and so on and so on, all of that. I was not always in the first row of responsibility, but I collected quite a lot of experience in this space.

And and Thomas again for you and I both know the company, but a lot of Our international listeners won't know Deutsche Post dhl, you know, they'll have heard of the names, but can you give us a quick introduction to them, if you like, as a group then.

So at the time that was, let's say, a company which was taking care of the post delivery service in Germany. So really a state owned and based company. However, it was taken public and it developed to a worldwide active logistics company. And that has been done via a lot of M and A transactions. And you've mentioned one which was a very crucial one and also fall into the time when I was working at Deutsche Post, they acquired the DHL and that made it really an international logistics provider.

And with that early stage in your career, you were making those, you know, thrown into the deep end. You're learning lots of new treasury things and everything else. But if you look, reflect back on that time, obviously it was, it was great. But there were some people that are, you know, coming in that sort of similar situation, perhaps not getting that experience. What, what were you aiming for saying? Just throw things at me, I'm new to this, I'm happy to do this, or what recommendations would you give to people at that early stage? Just get stuck in.

I was already with the experience from the internship, I was already fleshed that this makes sense and is interesting. And I was already, let's say I love to have the opportunity to work on all these projects. That was great. And if you work in Treasury, I always say, look, you are so close to important pieces or projects to the company and you get so quickly also a huge level of responsibility. Yeah, that attracted me a lot. I love that from the first day, just to give an example. So I was at the time a trader for Deutsche Post as well, and young, coming from the university. And you trade your first 1 billion euro on one day. That's. Yeah, let's say you have the way you call the bank, you trade this amount of money and the deal is done. Yes. There's a 4i principle and if something went wrong, someone will quickly let you know and you have to correct it and so on. But in essence it is quite different to other areas where you come and join and work and you have always to get an approval from someone else and so on. But here you get from day one, quickly, quite a massive amount of responsibility to take care of. That's something which I found very interesting in treasury activities.

And you were there for seven years. You know, you're sort of broadening out your treasury experience. What was that? If you reflect Back on how you started, as you say, a young trader to then before you made the move, your first move to Bayer and things like that. What, you know, talk us through that time or just how did you change as a Treasury professional?

For me it was always exciting because there was so much change and it's maybe unusual to stay for so long with your first employer. However, I felt all the time it is exciting. There are always new projects and as I said, there was quite a lot of things which have been set up, which you usually do not get in touch with in such a short sequence that attracted me. Yes, now it's a long time ago, I can openly say I had also some opportunities to leave earlier. However, that would have been, let's say to go somewhere else where it would be doing more or less the same at another company. The change to buyer was that I was offered something which was interesting but which I was not working in all the details before because I came became then head of structured finance. Again it was in the finance arena, but something which was somehow a little bit closing the gaps which I've not worked before. And that attracted me then to make the move.

And then you made the move, you know, so to Bayer at the time, what was this, what was the group like? Because I know at that time, because I know that it's been through lots of transitions and grown and developed and changed. You came in as head of structure of finance. But talk us through that move and what the. Again, explain. I know the group, you know the group very well. But again we have many international listeners who go, I know the name, but I don't really understand the breadth of what they do or what it, what it did at the time, if you like, back in 2005. So maybe you can explain that to the listeners.

Sir, it's a, it's a worldwide known brand, it's a chemical company from the beginning, let's say, but it moved now into a crop and life cycle company that tells you already what it is about. I've collected quite a lot of experience with my first employer. Then I went to some other employer who gave me the opportunity to bring in quite a lot of my experience but collect immediately new ones as well. And second, as I said with my first employer, I was really a lot of hands on, put up with sleeves and work on all these different topics and collect the experience and set something up which was working and yeah, was fun. Now I joined then a company which had, let's say a history of more than a hundred years. Meanwhile 150 years, by the way. So. So I had from day one the feeling, look, here you can learn something in addition. Yeah, because there was even more experience already established. So it's fair to say because before that was set up and established and here a lot of was in place already and I could obviously collect again another level of experience from teams which were there already for much longer and had things already established also quite some time earlier. So that was very attractive and gave again the opportunity to take new knowledge on board.

And you went in as a head of structured finance, you'd got this breadth of treasury experience across the board, if you like, and then a slightly more specialized role within structure of finance. Would you recommend that to people? What was that like for you? Going in large group but head of structure finance. So great role. What was that like, let's say for.

Me, it matched for me, right, because as I said, I was working before interest rate management, even in cash pooling, I have worked on. I had even the opportunity to do some investor relations work at my first employer. So really a broad set. However, in structured finance, if you ask me in easy words to explain what do you do as a head of structured finance, it's about, let's say, funding the company. But if you put the structure, how to fund the company on paper, it will be a complex structure because simply it takes a lot of boxes to explain how you have taken or how you put a structure in place which uses certain structures in the company to the benefit of the funding level. Let's say that's the difference to, let's say capital market activities, where it's an easy structure, you can put it easily on paper, it's less boxes and that matched to my experience and my background, I would say wherever you join in finance or treasury, it's a good entry and there are rooms and possibilities to move around within this, this area.

And when you say there's room to move if you're in this more specialized role, what do you mean by that?

Yeah, that's a good point. It finance is you need to collect this experience from my point of view somehow. And it is a specialized role. Yes. And I see always people coming in and want to take early on and very early also responsibilities for teams and so on. And that's not so easy from my point of view in finance, look at my own career, it's the same thing. You've collected a lot of know how in the first place. And to come in the situation, to really lead teams, that's something which comes in addition, and which usually comes also after you've collected all this knowledge, because you need to know also what it is about in context. Yeah.

So, Thomas, you did that role and a more specialized role. Would you recommend that to people? If you're perhaps a more, you know, treasury manager, then you're coming into a more specialized role. Is that. Is that something you were focusing on or what are your thoughts?

What I would recommend is enjoy what you're doing.

Right.

So do really. You feel that this is a passion you would like to fill and which. Which makes perfect fun to you. That's the best recommendation not to think about. Where do I want to be in three or five steps from now and which step do I have to take now so that I get the. I've never done that one. I always loved what I did. That sets a lot of power. Free to work intensive on further development for yourself, but also for the benefit of the company, obviously. And that opened doors at a later moment in time. But I was never thinking of, I have to do this move in order to open this or that door. It's either more the other way around. I always went there and said, this is of interest to me, I'd like to do that. And people came to me, friends came to me and said, hey, you're doing that. Are you crazy? You want to do that? And I said, yes, of course. And I can. The only thing which I'm sure of is I will have learned something. Whether it's useful or not, I don't know, but I was sure I will have learned something. And that in the end, yeah, you know, my way. So it was not too bad.

And when you say that. Because that sounds counter, if you like. A lot of treasury professionals are very driven. I would give a practical example. There was a lady I placed with a large UK company and I remember the treasurer saying to me one time, said, look, why does she want to do bonds so? Well, because it's something she doesn't have on her resume. She's desperate to do bonds and things and. And this treasurer said to me, do you know bonds are actually quite boring? I was like, really? She would know, because you do all the structuring, get all the things, then you hand it across to the lawyers and then they escort you out the room. As a treasurer, they do all the interesting stuff and then you come in the next day to clean up everything and implement it and everything else. It's actually not as, you know, as. As enthralling and as amazing. Well, she Went in, she got the job and after about six months she was like, do you know what? I should have listened to the Treasury. She was enjoying it. But you know, but it wasn't quite as the magical one that she said, actually the breadth of treasury is what she enjoyed. But you've got a series of different areas and that's what I was, that was going to lead it into. Then you took that role and it sort of, you know, was a springboard for you to go into the capital markets role. What was that like and how did that, you know, change?

That's also interesting because I was heading structured finance and the role of capital markets heading the capital markets function was more or less something like a logical next move. Yeah. However, this position was, a nice colleague was working on that one. Therefore it was not vacant. So I said, okay then, I'd like not to sit and wait, let's move somewhere else. And I, I was offered to go to Asia to become a local CFO in the region of Asia. And before I stepped on the plane, I said to my boss at the time, I said, look, if the head of Capital markets becomes vacant, wherever I'm on the world, you can call me. And he called me 14 days later. So 14 days later the position became vacant and indeed then I said, look, I'd like to do here, finalize a little bit of my education for the local CFO function. But then I come back and take this position and that's what happened. So I moved then back became head of Capital Market. And as you said before, I tried to explain that with a piece of paper. If you try to draw how the transaction looks like, it's not so difficult. However, it's huge size and it's quite massive and important to the company. And I became head of Capital market at the time when we saw the financial crisis and the worldwide financial crisis. So that was of high importance to work on the funding measures for the company. Yeah, that was interesting. And it was a high attention topic. Usually, indeed you put your funding in place and everyone is happy because the funding is there, but it's nothing special. Now during the financial crisis, funding and having access to funding was at the top of everyone's mind and it was really relevant.

And when you say that it was highly relevant. You developed within that role for a number of years, but then you also moved, you know, location wise a bit later on in that role and moved to Antwerp and things like that. How was that or how did you see your, you know, you were getting through the crisis that's how we got that under control. How did your career then develop from there, if you like?

Yeah. I told you, as my first attempt to go abroad terribly failed, I took another one a couple of years later and said I would love to go abroad to collect this experience as well, but it doesn't need to make sense somehow. Yeah. Then the opportunity arose to go to Antwerp and build up a treasury center. And essentially that's an in house bank for the company and independent. And it is, let's say setting up really treasury structures for this entity. Much smaller than in a tax lit, distant company. But yeah, it was also to set up a new team to work on the processes, to work on more professionalized processes for putting the deals in place and so on. So it was really like heading an in house bank.

Yeah. And likewise to sort of move location for yourself as well. What was that like?

It was great. I loved it, to be honest. Yeah. Belgium is not so far away and people might say, look, this is not even abroad because it's really just a couple of kilometers. That's true. That comes with some. It is not so far away, but it's nevertheless different. And it's not such a cultural difference than if you go to Asia and to do. Yes. Or wherever. So I need to admit this one, however, still it's different and I really collected also there a lot of new knowledge and I. I love to collect this experience and I don't want to miss the opportunity which I had to go there.

And you continued your development with the group and it was, you know, growing. You had that role. You then took on another progression, if you like, promotion in 2015, you know, how did. Was it just natural that you were just taking on more and more? As you said, you're very open to development. So was just natural progression for you or what happened?

Let's say I have shown with this setup in Belgium that I can build an organization and that's what I did in Belgium. It was much smaller. Yeah. And we had at the end really a very international team. We had state out of the art processes. We had transactions going through Belgium which didn't go before. So it was really a good development over there. And at the time, in 2015, Bayer took to the decision to carve out a business, the biomaterial science business. And this was a subgroup, so a sub function of the group. So with other words, finance is centralized. If they carve it out, there is no finance function. It needs to be established. Now, as I've shown before that I can build a finance function. They've asked me whether I would consider to take over this role. And this is really a massive, much bigger challenge than setting up the treasury center. That's true. But yeah, I was open to it. I said this is a lifetime opportunity. You start in front of a white paper to set up the finance function of a company which has the capabilities of becoming a DAX company. Yeah, challenging is that, you know, you need to be ready in eight months.

Wow. How was that?

Yeah, that was the biggest challenge of my life, if you want, because, yeah, you have to. Do I always say, look, these are three mega projects and every mega project would be already in a project in its own. Yeah, there was the recruiting topic. You needed to get the people on board without making too much compromises. You need to be quick and build the teams. Second, you work on processes and implementing a Treasury software. Treasury software implementation can take you years. We needed to be there nine months. So that was really a challenge. And yeah, our intention with the carve out was to have an ipo. So also an IPO needs to be prepared and it's not without the finance function. So that was three mega projects in one year at the same time. Yeah, that was really challenging.

And how did you organize it in your head? And what I mean by that is we have listeners who might be in a similar situation. They're about to be thrown in at the deep end. The experienced treasury professionals, finance professionals, they know what they're doing just like you did. You knew what you. How did you organize it? And go, right, okay, we got to do this in eight months. Sounds like a massive sprint. You know, how did you think about it? Sometimes when people go to startup treasuries, we talk to on the podcast, they have their checklist, get the cash, get the fx, get the risk management. You're in a more, you know, mature company, mature group. How did you. I know, working with people. What, what were your key things in your key drivers, in your head?

There was one really important meeting which we had with my pen peers and the CFO of the company. We came together and every function had explained what needed to be done. So as I gave you with the three pockets, now a high level overview what needs to be done in order to make it a success. And it was clear what needs to be done. And everyone with the presentation always ended with the same sentence, we need to get this done. We have this time frame. It's impossible, let's get it done.

It's impossible, let's do it anyway.

Yeah, yeah, yeah. It sounded really, always really impossible, but let's get it done. And that was the spirit which we were working on it and that was the way how we get it done. It's not one person getting it done. It's really teamwork. And if you've asked, how did you structure it? Obviously I put a lot of attention to bringing also people on board supporting me. So my leadership team was quickly established and I had them working with me on that one. And we could, let's say jointly work on certain topics and the rest is really organizing the different steps and giving responsibility to the team members which are there already. In essence, I think it was a very intensive way how to work with each other. And there were obviously like in a startup, almost no hierarchy level because we simply work together with having one goal to make it happen. Yeah. And that in the end allowed us to be successful.

And so you progressed through that. You did the separation and everything else. Can you just talk to us about what material sciences is? You know, again, you and I know a little bit and in fact I wouldn't profess to know enough about that part of the business and polymers and things. Who are the chief customers or how would you describe yourselves? What's, what's the, you know, how do you describe Covestro?

So it's a high tech polymer industry. So it's, it's a chemical company producing high quality plastic material. Yeah. And you can, I think the easier way is to, to put it than taking the technical terms of MDI and TDI to explain the applications which are made out of this one, that makes it much more vivid, let's say. So if you take for example rigid foam, which is mdi. Rigid foam, let's take that one. This is used for isolation, for example. This is the best material for isolation. There would be no opportunity to have that. You have a stress route on the field and bring it to your refrigerator at home and having fresh fruit at home without this kind of material because it takes care that over the whole way of the logistic chain to bring it to your refrigerator and also in your refrigerator. That for sure that will be mdi because it's the isolation to keep the low temperature there. That's an example, for example. So TDI is a soft form. Yeah. So you will have always, every day a touch point with our materials. Because if you lay at bed, you already as, as long as you do not have a water bed, you will have immediately a touch point with soft foam which is made out of TDI and If you go and approach your car, and so on and so on. And a third component are coatings at adhesives which are used also for developing scratch resistant surfaces or in the area of wind plates for example, which are made out of in the traditional way. Such winch plates are made out of epoxy tarts, resins, sorry, epoxy resins. But we have found also a way which is quicker in the material, gets into the final shape quicker and has a better resistance against the wind and so on with a specific coating which we put on on top of it. So this is just examples of the products which are finally made out of it. We are early on in the chain. So we produce the raw materials, the ones which then the producer happens to buy our stuff and build this product. So this is the reason why you will never find Covestro logo on the products. Because we are a B2B company if you want, because then the producer really brings the final product into the market.

I love this. I talk to so many of my clients who, when you know, they say their name and they're like, I don't understand the product. And they go, you know, Johnson controls you. You touch them virtually every day in your car. You know, if you're. One of those bits is probably made by the company or they've had a hand in that, similar to yourselves. You know, I open my fridge, I'm probably touching one of your products, you know, or makes it, makes it work, which again makes it bring it to life to me. I love that.

You cannot exclaim every day. You will have touch points with our products.

Fantastic. And so going back to the role itself, you then went, you know, you, you had your role, did that 2015. And then since then we've been through a minor corona pandemic and a couple of other, you know, global events at the time. You went through some interesting times in the pandemic because you did some takeovers and mergers and lots of, lots of different things. You've never stood still. It always accelerating. Can you maybe just give us a sort of run through of the past five, 10 years, if you like, or some of the things that have happened in the past eight years, maybe even, because I know that. And also the other thing, before we run out of time, I want to talk about ESG with you, with yourself as well, but maybe what pandemic was like for you.

Yeah, that's also a nice question because in 2015, when I established the function, already at that time I had on my list also to say I'd need to have a pandemic plan. If something goes wrong, what do we do then? So if there would be a. We've not thought about a global pandemic, to be honest, at that time, but I've built up with the team a plan. What do we do if a pandemic would hit us when that happened back in 2020, we've pulled out this plan, We've pulled out the plan and said, look, we've looked into it before. We said, look, these are all our processes. How does it work? And I was able to send my team home to work from home from one day to the other, essentially from the morning to the afternoon, let's say, on a day. I took the decision, let's work from home now. And everything worked smoothly because simply we had a plan, we had a clue, we would. We knew what are the crucial processes to take care of. Everything worked smooth as if. And it was really a change from one moment to the other. That was a good experience, but it showed us also that we are in a new situation. But we can work with this without a limitation. Indeed, we. We have done financial transactions more or less from home and everything worked out smoothly. Yes, I went to the office a couple of times also, maybe here and there to take a signature, but also this has been set up thereafter. So we've meanwhile all these electronic signatures in place, even this is. Is established. So yeah, it is a collection of good preparation. Even if I can say the team has prepared that. Fantastic. It was nevertheless astonishing and great to see that it worked. That's that kind of smooth.

Fantastic. And then throughout the pandemic, obviously, you know, everyone was working from home and everything else. You put your feet up, you just thought, this is easy, easy street, you know, we'll just carry on, turn the handle as a business. Oh, no, maybe we'll do a couple of takeovers and we'll do some expansion and things like that. What happened with you guys?

Talk us through, let's say the pandemic, let's say, was changing the world from one day, almost from one day to another. It was not that intensive, it was smooth. We saw it in China coming and maybe nobody was thinking that it gets really to a global pandemic, but it changed it then dramatically. And we saw what happened to the stock markets and so on in this area. And it's not only the finance function, but finance again at that time, I think is. Is one of core functions in a way that liquidity is key in order to have the company Survive you need to take care that you have access and the possibility to have access to liquidity. And with this again your, your rating plays a role and we are committed to our solid investment grade rating. So we've taken necessary steps in order to, to have a good profile and have good access to funding. And yeah, that allowed us in addition to all this even to execute an opportunity which came along to further develop our business and we talked about it. So that was an acquisition in the coatings at the CTCS area. It was the RFM resin business which we've acquired and that was also paying into our overall strategy to become fully circular because the products are with water based manufacturing and, and therefore had contributed to our sustainability goals. And yeah, it's in, in total it's a great topic because yeah, it was not easy to see that happening at the beginning of the year. However, we took decisive measures and actions and not only purely in the finance arena by the way, but for the overall company to help to contribute with establishing a solid and keeping a solid investment grade rating which then with further development in the market and an opportunity arise, gave us the chance to really substantial M and a transaction paying into our global strategy. And that was again something where we could contribute and generate value Here from the team in finance.

Amazing. We're approaching, we're not that far from the end of the show. We talked about green financing. There any other areas that you think, you know, treasurers, if you like out there need to be thinking about, you know that not you're not worrying about, but keeping an eye on, you know that maybe when we're, you know, you and I meet up at a conference or you know, I know there are various conferences, Mannheim coming up and there'll be Barcelona with Euro finance, any of those big conferences and the key topics, with the exception you just talked there about, you know, green financing and carbon neutral things like that. But any other areas you think that people should be thinking about?

Yeah, I think there are quite some things going on. You've mentioned already the words of having the capabilities of issuing green bonds. We've done that last year by the way as well. Implementing a green financing framework did a green bond, but also in the areas of energy. So I've mentioned our strategy to become fully circular. And an important component in this context is also that you purchase renewable energy, which is different to what if you simply buy spot energy in the market. Now you think maybe. Why is he talking now about procurement now? Because the topic is that such products and this renewable energy comes Usually with long term contracts. And long term contracts again have a certain mark to market quickly and that's a financial risk. And as such, again the finance department is involved in how to manage these kind of contracts and how to take care of this. And that is again a topic which is I think showing for. For young people who want to or who have potential interest in finance. It is yes, on one side you are working on making sure that the liquidity access is there and that the company is going and can prosper and can put their strategy in place. But all the other components happen as well. As soon as it is something which comes here and there with a financial implication, we can contribute and help with our background and approach to further develop and contribute and help to create value with this.

Well, as I say, we target the podcast used to be the commute time. People don't do commutes anymore. We tend to do for about 40 minutes. And we're approaching the end to end off today's show. Thomas, what are the takeaways? You know, we can have a longer section on this as well. You know the takeaways you would give to someone maybe if they're in the earlier stages of their career or mid stages. You've given some great advice already about being open to ideas and things which I think was fantastic. But what other things would you give to sort of sign off today's show? If you know what are the things that people should be thinking about out there?

What I always say to my colleagues here as well, I say enjoy what you're doing. That's the most important thing. Second, be open for change and new challenges. Collect international experience and maybe in addition also to the press previous question it and digital mindset helps as well. That's something which is also a trend which will further change also the treasury processes and is important to collect some knowledge on this in this area as well.

Let me just explore that a little bit more. You say be open to sort of new challenges and open. Do you feel that people have should move internationally or it's just something that you embraced and you got so much from it as well with your, your team and things.

I think it's important to collect a diverse set of experiences. Yeah. Being open for international experience is one pocket you can tap and it makes sense to make use of it. Is it a must have? Must, must, must have Maybe many people would say yes. I would say not 100% necessarily. If you can show then in other areas that you are diverse and you've collected a diverse experience, but it's helpful. Yeah, it's helpful to go abroad and to keep that and collect this experience as well.

Amazing. But as I said, we'll put your LinkedIn details in the show notes. Thomas. Amazing chat. I know that your LinkedIn will explode with this, so there'll be lots of people who want to connect and some people say, no, thanks very much. You have to be in Treasury. That's it. Thanks. Amazing show. Thank you, sir. And we look forward to seeing you, as I say, at one of the conferences very soon.

Many thanks for having me. It was a great pleasure.

Thank you.

Looking forward to all the connections which are possible thereafter.

Flooded. Thank you, sir.

Take care.

Hello, it's Mike here again. I hope you enjoyed this week's show. If you did, then maybe you want to follow the show or subscribe, depending on where you listen, whether that's itunes, Spotify or another great place to listen to the show from. It's totally free and means that you'll be the first to see each and every week when we release a new show. And maybe whilst you're there, you could even leave a quick review. Reviews and ratings are among the most important metrics for a podcast to effectively rank. And as you can probably appreciate, the podcast is a lot of hard work to produce every week. It'd be amazing. Just take, say, 20 seconds, leave a quick review of my amazing guests and their great career stories. We'd really appreciate it. Thanks very much and I can't wait to see you soon.