From Auditing Banks to Leading Global Treasury with Neil Wadey

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 treasurers about how they build their careers, where they are now, where they see both themselves and the treasury profession going to next. And a special thanks to Flywire, our fantastic sponsors. If you've ever wondered whether there was a way to ease your international transaction hassles, they're the guys to talk to you. Follow the link in our show Notes. You can see me talking to my mate Greg Levin, their Senior VP of Sales. I get to ask Greg about who are Flywire and how they can help you and your treasury team with your cross border payment headaches. Just follow the link to the interview in today's show Notes. And now let's get on with the show. In this week's show, delighted to be joined by Neil Wadey, the group treasurer at British American tobacco. Founded in 1902, they have evolved into one of the world's leading consumer goods businesses, the only truly global company in the sector. As a leading FTSE company they are spread across six continents, have more than 50,000 people worldwide. Their purpose is build a better tomorrow by reducing the health impact of their business through greater choice of enjoyable, less risky products for their consumers. But what we'll do is we'll talk about bat a little bit later on in the show because I want to go back to the beginning of Neil's journey if you like, before moving into finance and Treasury. Neil, if you like, take us back to the beginning if you would sir, I'll hand over the microphone to you.

Thanks Mike. I won't go all the way back.

But I'll far enough.

Maybe I'll jump in at university. So I'm a mathematician by educational background, so drives quite a lot of analytical viewpoint and I still use that, I think every day. I trained in the early 80s so that would age me with KPMG. So I was a big big eight in those days, big four today, chartered accountant and my clients at the time really fell into three, three buckets. I had banks, so I audited quite a lot of London banks second were holding companies or conglomerates. Conglomerates in those days were much more common. So I had a couple of conglomerates I got involved with and breweries. So those are the three things I got involved with. So I spent six weeks a year up in Burton on Trent when audit audits were much longer. I did that for four years, really enjoyed it, but didn't really feel that I wanted to be in the profession Long term. And I looked at. This was just before Big Bang, actually. I looked at joining what were called the merchant banks in those days and I couldn't quite decide that I wanted to be a banker. I think that was the reality of it. And I ended up joining the Hambro brothers. They had Jo, they just sold their interest in Hambro's bank and was setting up their new financial services businesses. And it was very fluid, it was quite dynamic, quite unstructured. And I thought, I'll give that a go, that'd be interesting. So I went and worked with them. So I was doing some actual financial management of companies, some structural work, some M and A work, et cetera. So I did that for a few years and then I suppose I felt I wanted more scale and I wanted more structure. And that's when I joined BAT. So we're talking 32 years ago now. So time has flown. And I joined in general finance, but with a specific area of expertise of M and A. So I did a lot of M and A work in the opening up of Eastern Europe at the time, transactions in, in Hungary, in Ukraine, in Serbia, in Russia, but also in Brazil and the Netherlands, et cetera. So I did quite a lot. And the U.S. so I did quite a lot of M and A. That was fun. But we then as a company split from being a combination of financial services and tobacco to become a pure tobacco company. And at that juncture I got involved in strategy. So I took over running the group strategy area. So we had five big operating companies across the world which kind of run aligned but not completely coordinated strategies. So my job was to bring those together as to one global strategy. And that was interesting, being really in the cockpit of a business. Where's it going to be in the next five, 10 years? And the area developed and then I said I'd like to get a bit more involved with the nuts and bolts of the business. And I thought I'd get sent to an operating company, a factory or something. And I ended up being seconded into Formula One. Wow. So I ended up helping set up the British American racing Formula one team. I went for a couple of years as their finance director. Very different. Probably a discussion for another day. Sporting entrepreneurs and big business. How do they sit together? Different objectives. Very interesting. And I did that for a couple of years. And if you want to know where Bar ended up today, that's the Mercedes team. So over time it's changed ownership and today it's Mercedes. But after a couple of years of that, I really did Say I want to get into the operating business. I didn't see myself as a long term petrol head and so I went to Mexico. So my wife and I went to Mexico for three years we worked in our business there. I was the number two in finance. I covered treasury type issues, tax, general accounting. And that was. It was interesting one to experience another culture. I think if anybody's got an opportunity to go and work in a different culture, grab it with both hands and do it as soon as you can, I think it's great. So I did that. So I learned the new culture. I learned to speak Spanish. It's a bit rusty today, but I worked in Spanish when I was there, so that was fun. And we had our first daughter while we were there. But from the business point of view, I really learned the nuts and bolts of a tobacco company. It had a factory, it had leaf growing, it had sales, it had, it had everything in it. And after three years I suppose I had a choice, would I go onto another market? And I looked at a few and BAT is very diverse. So we had discussions about South Africa and Egypt and the Caribbean and these all sounded great. But in the end the company said, neil, we'd really like you to come to the center. And I said, what does that look like? And they said, we think you've got the kite type of skills to join our treasury team. And I said, yeah, I've been, I've audited Treasuries in the past and I've been involved in banking. That's not Treasury, I'd say, but it's financially literate. I'm up for that. So this was 2002, I came back from Mexico and joined the central treasury team in the kind of corporate finance area. And I grew that area, adding things onto it, funding, risk management, latterly kind of insurance, et cetera. And I loved it. I really loved Treasury. I committed to the exam, so I did immediately in 2002, three, four, I did my Treasury act exams. I thought they're really useful for giving me a backdrop on Treasury. And then I worked through the business adding more on business partnering. See, I'd learned a lot about that in Mexico. But seeing business partnering from the treasury angle, I think it's important that we bring a different lens on business issues and we need to be both robust and clear on those issues for the business. So I've been in treasury ever since I went up through various roles and I suppose about a decade ago I became group treasurer of 100. I think it's 150 markets now. At its peak it was 180 markets. Around about 4 billion of debt book 50,000 employees. A very diverse global scale business. Truly exciting, I think especially now with its transformation from pure combustibles into new categories. Maybe we talk about that later. So I always think I'm really privileged and I'm very humble that I get to work in a great company with great scale and lots of fun things to work through. And on the other side, I've got a great team that work with me and developing that team is actually probably the biggest thing I do these days. So team development as well as technical knowledge is really key. So maybe that's a bit longer than you expected. That's where I came from.

That's why I showed up because it was a great walk through that part of the journey. What I wanted to go back to a little bit was exactly as you said when you joined bat, it was conglomerate and everything else. Can you maybe talk through the company journey in your time because you've seen it firsthand, how it's evolved to now and then you talk to, as you say, moving away from combustibles into this other evolution. Can you maybe just give us a quick walkthrough of that?

Yeah. So just as I joined some of the listeners may remember BAT had been subject to a bid by Goldsmith. It was always name was known as the Hoylake bid. And that was when BAT had businesses in tobacco, financial services, paper, retail, cosmetics.

Was huge, did everything.

It did everything. And they had basically shook up and said does this make sense? Is it the right value? And one of the defense strategies was to refocus on two businesses. One was financial services. And they had things like Eagle, Star, Allied, Dunbar, et cetera, some of those names you might remember. And they had this global tobacco business. So in the early 90s they would move to this two businesses and they ran those in parallel for I'd say seven or eight years around the end of the 90s. And I joined in the early 90s. That was when we split the two apart and you effectively ended up with financial services going off as a separate entity. And the tobacco businesses which were very global in essence moving forward now they, as I said, the first thing there was really about aligning these entities. Five, I think it was five entities in different countries. So we had one in the us, one in Germany, Brazil, et cetera. But they were all doing similar things and they were aligned but they weren't completely coordinated. So we brought those together as one big operating entity. And and ran that for a number of years effectively until 2017 is when we then purchased the the remaining part, the 58% of Reynolds American, which is the number two in the U.S. tobacco market. We purchased that and that really transformed our balance sheet, our scale. So we went from a kind of 6 billion EBITDA company to a 12 billion EBITDA company. So our scale became really large. But we also took on a significant debt portion at the time. And then broadly at the same time us moved from really running that combustibles business to more being able to exploit the emerging technology of new nicotine related products, the new categories. And that's where we started to talk about better tomorrow transferring consumers from combustibles to non combustibles which are generally found to be lower risk products. That's the journey we are on now where we've grown that business to around about a 3 billion turnover business. We have a target to be 5 billion by and by 2035 we would look for that to be over 50% of our overall business. A massive change. So at the moment we run the two together. The old combustibles business and this new business. One is very predictable, one's very dynamic. That's one of the challenges of BAT today. So that brings you up to date and that's great.

And just from that for you as a career treasurer and everything else, potentially using that as that sort of that solid revolving business versus that dynamic changing, shifting, great challenge for you. Treasury terms, what's happened like in the.

Early days it was very much about running the FX risks or checking that we had got the right working capital management. It was much more nuts and bolts stuff. But as we started developing into these new areas there was much more structuring, there was much more review of kind of the risk trade offs. So risk became a greater part of my role. And I'm not talking kind of financial risks, so not interest rate or fx. But I started to take on the enterprise risk management area and I think I mentioned insurance. So bringing those together and I do think there's a great affinity between treasury, core treasury and the risk management area because we talk broadly the same language. So my job has moved more into that space but has still got a lot to do with what we would think of as core treasury with a lot more change. So setting up new businesses, new structures, making sure the liquidity. Historically we'd have the liquidity, we'd have the capital structures in markets and it was more about how do we make sure working capital's right and extract money going forward. We were much more about is it structured in the right way, how do we make sure that we can have a dynamic, dynamic business model, market by market. So much more structuring kind of work, so kind of change of emphasis. But the two are now going on at the same time. So we run those two together. So we have have to wear different hats at different times of the day. And indeed the discussion on the business partner inside can be very different in terms of why are we investing here? Is there an objective that can be met? So we look at our markets very much in terms of do they align to the future strategy. Therefore, can we see the execution of the future strategy come into fruition in that market? If not, what's the role of that market in the overall business? Is it for cash, is it for something else? Or is that a case for a sale or an exit? Indeed. And we have in the last year or two exited a number of markets because of that or that's not the key focus of my job.

No, but as you talk about the input that treasury has is invaluable there. And that's very much. We talked before the show about treasury being a true business partner and also treasury, the profession, if you like, of treasury. Just on that. I know that you're, you talked about the exams and people developing themselves and maybe we have true, more junior treasury folk listening to this as well. You very much believe in the power of studying treasury and everything else and people getting learning treasury on the job and things. Can you describe that for us?

Yeah, look, I'm a big believer in professional treasurers, so I think companies can bring in generalists and they can do a good job. I'm not saying they can't, but I think the true power of a Treasury professional, bringing probably together three elements. One is knowledge of the business. That's the business partnering thing I talked about. The second being deeply financially literate. And I. And that's why quite often accountants make pretty good treasurers. It's not the only reach, it's the route I had. But I think it's a good basis because you tend to understand a lot of what we're talking about. And then the third element, but I don't think you can undersell this is actually the technical side being of a treasurer, whether that's in risk management, capital markets, fx, cash and banking, or digital treasury as I might call it today, and in risk, all those things add to a really powerful position in the company. And I think that last bit you can get in two ways in my mind. You can either work through the job training on the job, which I think is really important, but you can also supplement and improve that with professional qualifications. And whilst it's not the only place to go, I do think the act qualifications, which I did, are a good place to start. So if you can bring all of that together, I think that's what a good treasurer is. And I know when I walk into the board and talk to them about treasury, they expect me to be able to dominate all those areas. So they need to be completely convinced that I know what I'm talking about in terms of treasury as a technical area and maybe the funding book, but also tech treasury and its impact on the business and vice versa. And I think that's what anybody should aspire to. So get your exams, but also be pushing for more experiences on the job, whether that's doing multiple roles and I think with new structures that's perhaps a bit harder because treasury isn't. We're using shared services, et cetera. But if you can't get the overall job, maybe that's putting your hand up and say, I want to be involved in that, that process project or whatever. Because you can, you don't necessarily have to change job, you can learn by project management as well.

And just I was going to say you touched on capital markets. We spoke about this before the show. Congratulations. Recently won an award from the act, was a recognition for you and the team. And as you were talking about there, what. Why do you think that was important or can you describe it to us now? It's been announced, so congrats. What was important about it?

So I suppose there's two views of why important, why was the transaction important? It was very much about taking a debt structure which had been done in an M and A environment and also where interest rates were low. So it had quite high short term funding towers. So we really wanted to transform that and flatten our funding profile. We repurchased a lot of our short term debt and moved that out longer, but at the same time being really cognizant that we couldn't push the overall cost up. Treasurers have to run risk, but they also have to run budgets. So at the same time that transformation had to be done within a cost structure. So we actually went from around towers of around £7 billion in a year to towers of 3 billion in any year. So a tower is the amount of refinancing in the year. So that was a transformation of our debt Book and that allows us as a business to be much more flexible when we fund. If we were 7 billion, we needed two big transactions a year. If we're 3 billion we can probably do one significant transaction, we might do two, we can do it with one. So a lot more flexibility, a lot more stability in the business. So that's what it was trying to achieve. From the internal point of view, it's great for the team. I think they did the work, they should get the recognition and I think peer recognition is the best recognition you can get.

And with the team there just talking, maybe not without too much detail, structurally wise, how do you then run the team? What do you see as you touched on digitalization there and how do you see the guys developing?

Yeah, so I run a very, what I hope is a very flat team. Yes, it's a big team but it's pretty, pretty flat. So I have a leadership team which effectively has a head of corporate treasury. So that includes all things like funding and interest rate risk management and the like commercial treasury which is the business facing part. So this is looking for solutions for the day to day business, digital treasury and banking, which I suppose in old parlance would be cash and banking, but it's much deeper than that these days. That area is looking at E commerce, it's looking at cards, it's looking at working capital solutions and it's looking at our banking infrastructure, pooling, et cetera. And then there's the head of, the head of my global treasury operations. So we use shared services that's based in Romania and that person runs that operation day to day. And then lastly I have a head of insurance and enterprise risk management which is a kind of sister function. As I said before, I think there's a lot of synergies there and we try and mold that into the general treasury. So that sits as my top team. They get on with it, I give them light direction, I quality control and I stretch what they come up with. But I'm not looking today. Manage every nook and cranny.

So yeah, they get on and do.

It, they get on and do it. And I would say this but I think they do a great job.

So I'm I now we got it recorded. That's it.

Yeah.

So you say this in the next review they'll replay the podcast. That's fine.

Yeah, yeah.

And obviously one of the top topics that you and I, we go to the conferences and everyone's like oh, AI technology and everything else. Someone said to me, in fact I was interviewed for a magazine the other day and they were like talking about did I see AI as the next big thing for treasurers? And I was like no. Oh well I said no, I don't see it as I said. But treasurers has always been multifaceted and I compared it many years ago that treasurers. Bit like a car mechanic had this massive toolbox and then open it up and then choose this for cash management, choose this for risk, choose this and maybe a very much a master of lots of different things and knowing who to to choose. And I was saying look, I see that very much more as churches would look at AI, look at robotics and automation to go yeah, we can use some of those elements. But a few years ago was our blockchain's going to take over. No, not take over, it's going to be part of the. And you touched on it there. I just wanted to explore a little bit with yourself but where you see it fitting in or you know, what do you get asked about.

Yeah. So I mentioned digital Treasury. Digital is a buzzword for this space. I would probably rename it a different word today but that was the word I chose a few years back. So we put a more technology lens on treasury and I suppose we've gone through the systems part. We're a global SAP hack. One instance of SAP across the globe. We then have added some automation on top of that and we moved from being what I'd call a policy driven treasury to a data and information driven Treasury. And I think I see AI as probably the next stage and all of this is accelerating. But I think if I could paraphrase or rephrase what you were talking about, I think it's down to use cases.

Yes.

I don't think I see AI taking away the core of Treasury. There's still a lot of things that I Today I feel more comfortable with the human interaction. But the use cases of AI are starting to come into place. We're not quite there. But do I think we'll be using AI to do our cash forecasting at least our top down cash forecasting in a few years time? Yeah, I think we probably will do. I think I'll let AI make all my FX hedging decisions? Perhaps not. But as we get more comfortable with these things and work through the use cases then we can fold them in. But we also have to think about the businesses we work with at what speed are they going at and therefore if the business is going faster then we need to keep up.

Yeah.

And make sure either from the risk aspect or from the opportunity side that we're not getting, getting left behind. An example of that is not AI, but it's cashless. A huge swathe less so in the UK perhaps. But when I look at my markets around the world, some quite surprising markets that have gone wholly cashless in the last couple of years, which you wouldn't expect. So if we look at AI and say, what would that look like in the future? I think we have to have an open mind, but robust use cases would be a good place to start, I think.

And you've introduced it there. I'm not that far off from the end of the show, but we still got what other areas you talk about cashless and things like that when you're talking to the businesses and when you're talking to the team, what are they, what are you saying? Right guys, we need to keep an eye on this and again, maybe this is an advice show for people. What else do you think people should be thinking about?

Yeah, so I think every business has its own dynamic. So for the, for the very broad geography kind of business that I'm in, the developing markets, market by market, so FX markets, that's hit by geopolitics. So you have to stay ahead of that. What are the new solutions that therefore come out either to fund or to repatriate is important. Regulation is fundamental. I'm not talking about tobacco regulation here, but treasury and finance regulation. If you're asleep at that, all of a sudden that's run past you. So stay, stay really, really ahead. And then how do we enable the business? So is your business changing? So my business is moving from one which was lots of small shops. You take a market like Mexico, we'd have 200,000 shops and we were collecting cash from them every day to something now which is semi cashless and moving towards in certain markets, certain areas, things like E commerce. So I then need to look at more at the E commerce space, the card space. So I think it's just staying up to speed and talking to the business continually about what are their problems and do we see solutions. And sometimes we co create and sometimes we bring new stuff to the business which helps solve their problems. But I think the main is keep the dialogue open.

Yeah, yeah. So we're going to put your LinkedIn details in the show notes so people can connect to you and there'll be a raft of people going. Great, connect. You take away some the reflections you've had today and or again we have a variety of listeners all the way through their careers. Some early stages, mid stages, late stages. As you look back, what are the takeaways you're going to give those guys?

Yeah, I made one earlier, which is a very personal one, which is if you get the opportunity to work overseas, take it, because it's really enriching. The second is every time you do a task, however mundane, there's always a learning opportunity. Put your hand up, get involved and don't think, please don't think that being Head of Funding means you are a treasurer. You want to be. If you really want to see the richness of treasury, you want to see the whole spectrum, please have the courage of your convictions and go out and grab those new experiences, either internally or moving on. But I think wide, deep treasury knowledge is really empowering. And then I think I just want to reiterate training. Lots of treasurers of my vintage probably came up in a more generalist way and maybe didn't do qualifications. I think these, they're invaluable and so I would push people to think about. To think about education. Lastly, for the kind of senior treasurer or somebody who's already in place, I go and grab those other areas that are tangential, pensions, insurance, enterprise, risk management, maybe esg, bolting on things that alongside your area is really enriching and also helps you have more influence in the business. So I've always liked doing that and I found that it's meant that I've got a deeper team doing more areas and they can cross cross, discuss issues and I think that's really important.

Fantastic. Amazing. Neil, it was lovely and sometimes I'm quizzing people and yours was lovely. Just a nice walk through your career. Thank you very much, sir, and look forward to catching up soon.

Cheers, Mike, and thanks to all the listeners and please reach out if you've got any questions. Anybody out there, happy to happily chat.

Thank you, sir. Thanks for tuning into another great episode. You really enjoy it. Thank you very much. You make it worthwhile, us recording them with these amazing treasury professionals right the way across the world, from the us, across uk, across Europe, and there's lots more exciting guests to come and lots more live events. We love delivering this content. We get asked now, is this what you do? Do you just do content? You just do. No, the reason we do the content is to get to know you guys, to give you back the tips for success, if you like. But we're here to help you hire someone. If you need to recruit, call us, because at our heart, we are a Treasury recruitment company. That's how we pay the bills, that's how we pay for the podcast and that's what we're passionate about. We hear from you at events and things. Can we also help you find your next great role? Can we help you hire? The answer is yes, that's exactly what we do. Yes, we do our treasury salary survey@treasurysalary.com that helps us know exactly how to benchmark not only your salary, but also when you're looking to hire. We know exactly what the market is paying. Wherever you might be, whether it's the us, UK or Europe, we want to make sure that we are the best informed, that we're not just finger in the air. We always know. If you want to hire the best in treasury, don't hesitate to contact us. Go onto the website treasuryrecruitment.com or in the US, you can contact Joe Grabowski Europe. Contact the lovely Katie for more senior roles and roles across the uk. Reach out and contact me or drop any of us an email joe treasuryrecruitment.com Katie treasuryrecruitment.com or mike@treasuryrecruitment.com Let us help you make the hiring process as amazingly seamless and easy as our podcasts are to listen to. Thanks for your amazing support and looking forward to seeing you at either an event or a conference very soon. Or just give me a call. Let's help you find the next role or recruit the next treasury professional. All right, until next week maybe. Thanks.