How Treasurers Navigate International Crises with Toby Shore

Welcome 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 and where they see both themselves and the treasury profession going to next this week's show. Delighted to be joined by Toby Shaw, Senior Director, Group Treasury Risk and Insurance at Emirates Global Aluminium. The group is the world's largest premium aluminium producer and biggest industrial company in the uae, outside oil and gas. Now, I've got lots of stuff here about bauxite mining and everything else. I'm not going to go into that. Toby wants to talk about that later in the show. Feel free. Yeah, just you can you pile into there? Just before the show, we were having a really good chat about Toby's background, which is really different to other treasurers. Didn't come up through the sort of treasury analyst, manager and everything else. Actually jumped in from insurance and risk and lots of other areas and things. So it's going to be a great show. Toby, take. Take us back to the very beginning when you're, you know, you're a young lad and everything else. First getting into finance and everything else. Talk us through it, because. Amazing background. Over to you, sir.

Thanks, Mike. Look, yeah, I think. Great to be here for a start and thanks for the summary. I think I'm a big advocate that every story has to have a beginning, middle and end. And so I think way back in the beginning, as a young lad, finished my university degree in international business. Why I did that, I've got zero idea today, and I don't think it actually qualified me to do anything. But my first job out of the university, apart from pouring beers in a bar and living on a resort island on the Great Barrier Reef, was actually working for the Indonesian government, of all things, doing customs clearance from Australia. So that was really involved around mining, metal, agricultural products that Australia was actually sending up to Indonesia. And the whole idea back then was to clear the goods from, in a customs perspective, to hopefully stamp out graft and corruption on the docks in Indonesia. So I've got a very, very, very quick baptism of fire into international trade, into commodity trade and into geopolitical politics between Australia, Indonesia and elsewhere around the world. Moved from there into a credit insurance company, part of now qbe, called Trade Indemnity. Head office was in Canary Wharf. I think it was one of the first entities down in Canary Wharf there. And it was a niche part of the insurance industry. So niche that my manager at the time tells me that when he Actually applied for the job, he was a big samo guy, played rugby, said, ah, I thought the actual job said undertaker, not underwriter. And so he thought he was applying for an undertaker's job. Ended up as a credit insurance underwriter. So spent four or five years doing that is like one of those things you never wish ill on people. But I was very fortunate that we had a couple of crises at the time. We had the Asian crisis, we had the Russian crisis. So I spent two and a half years circumnavigating the globe, restructuring corporate debt profiles, negotiating insolvency proceedings, doing all the things that you'd love to be doing as a. As a young 27, 28 year old. And that took me from the Philippines to Latvia to Czech Republic, into the States. From there I actually moved into the Australian Government Export Credit Agency, Efik Export Finance Insurance Corporation, doing exactly the same thing for the Australian government, except two years later. So all in all, I probably spent about four or five years just circumnavigating the globe, doing some. What was probably on, in hindsight, some silly things on occasions and going into some difficult situations. But in terms of the life experiences as well as the general economic and financial experiences that was given to me at that time, it was unparalleled.

So when you say that, you know, you were gaining again, these are treasury guys again, hang on, you know, Toby's out of treasury, you know, all this is different, but what was it giving you in terms of international finance and understanding of relationships? Because, you know, again, for some of these guys, they're like, oh, no, I should always stay in Treasury. What. What has it given you?

So I think that. And that's actually an excellent question, so I think that grounding really gave me the ability to do three things. One was to have a keen understanding of financial balance sheets and how resilient businesses are. And you don't always see a resilient business through the balance sheet. It's the ownership, it's the structure. It's actually understanding what the whole business is about, who they sell to, what their customers are like, what keeps the owners awake, what keeps the CFO awake at night. And it's really having a deep understanding of that. Second, I think certainly living in Dubai now, but I've always worked in a multicultural environment. I've worked in Asia, I've worked in Australia, I've worked in the UK and now in the Middle east. And I think that actually gives you an enrichment and as a treasurer, to really look to understand the different dynamics that people can bring and from different cultural backgrounds. And I think that too often in life we don't necessarily appreciate that cultural richness. And then thirdly, it's the ability that's brought me the ability to be quite resilient to myself. My bosses have always been overseas, most of the time on the other side of the world. And that autonomy and really it's those three aspects that have really tried to take that and actually mold that into my treasury career.

And then, you know, you sort of continued and again we talked before the show and you know, Toby's got this great background in risk management, insurance and understanding how that feeds into treasury, but that's built out. Then you did a tradius and then started sort of discover the world of treasury, if you like. So sort of an evolution or revolution, you know, talk us through how you then went through those and what that was like. Because it's again, really different with Trade Credit Insurance that really different to some of the.

So at the time I was working in Sydney for Atradius Credit Insurance, running their Southeast Asian claims Underwriting and recovery section, which means we went all the way up to Singapore, Thailand, across to the Philippines, Southeast Asia, South Pacific, again giving me an enormous amount of a richness around insurance, around risk management, around financial resilience. Fielded a call at one stage and saying, what do you know about Dubai and what do you know about aluminium? And I actually said, not a lot about either one of them. Six months later I'd moved my family up here and I had the job. So it was actually quite a bizarre situation. Again, never one to actually let a good crisis go to waste. About four weeks after I arrived in Dubai, the global financial crisis hit. Literally, it was four weeks. We were in Beirut and Lebanon for a conference. We got called back early by the CEO saying basically the proverbials hit the fan and this is when Lehman's were going down. The whole world was in chaos. Yeah, so we spent like 18 months, two years just trying to navigate our way through that. It was at that time that the existing treasurer was looking to retire. And they said, look, Toby, you know, we've been grooming this for two years and we want you to take over Treasury Risk and insurance.

Just explain the, you know, you made that so you. We, we skated across. Tell us a bit more about that group, you know, as a company sort of thing. You said you did two years challenging time and stuff like that. But what were the dimensions of the group or, you know, size just for. Again, someone listening is in Wisconsin, you know, they're going what? You know.

So at that time, at that time and again it was. So I joined the company at that stage was that was Dubai Aluminium Dubal. We were producing just on 1 million tonnes of primary aluminium, which made us the largest single site producer of aluminium in the world. Not so bad for Dubai. And certainly it's an interesting segment when most people don't associate heavy industry or heavy manufacturing with a place like Dubai. But we celebrated 40 years last year, so what was that? We were 30 odd years old when I joined, owned by the government of Dubai, but selling the metal right around the world and at that stage, and it'll become relevant in a little while, but we were selling probably at 50 to 60,000 ton, 2 to $250 million worth of aluminium into the States. And so that market almost dried up for us overnight, as did Europe. So a lot of our metal was then diverted to Asia, to the Middle east, et cetera. And so for us at that stage it was about economic growth in terms of where our customers were sitting, but also the financial risk management of those as well. And from the treasury perspective, it was about cash preservation, cash conservation. We were always at that stage. We had a small debt portfolio, so it was really just a cash machine.

Yeah.

So I took on the treasury role in 2010. We were doing what, two and a half, $3 billion worth of revenue at that stage and our treasury system was an Excel spreadsheet. So I said, look, hey, look guys, you know, we've got to do something different here. So we put our first TMS in sungards quantum in 2011 and actually got some very bright guys to come and join us. And some of the stuff we did with that was really cutting edge. We had deal books, we had full backwards integration into 360t hedge accounting, hedge relationship management, all that stu we put through in 2011. And the whole mantra at that stage for me was Fat finger Thursdays. And the number that we were dealing with that the volumes weren't large, but the numbers were big. And a typical shipment for us is 1, 2 million dollars. So the propensity for a keystroke error, or as I say, a fat finger Thursday error, was just too great. And so really from that point on, from 2011 to now, we're on our second TMS and it's just been a constant revolution in terms of a constant evolution of technology. I was looking to make things more automated, how we can actually push the barrow further. So that took us probably up until 2014. At that stage we had a joint venture with Mobile Development Corporation from Abu Dhabi, which is one of the big wealth funds in Abu Dhabi, owned by the Abu Dhabi government. And we had a 5050 JV with them on a new smelter, a greenfield smelter we were building in Abu Dhabi called Emirates Aluminium Emaar, that now is a 1.6 million tonnes smelter, the largest smelter in the world. And so combined capacity today is 2.6 million tonnes, which makes us the third largest producer of aluminium in the world outside of China. If we include the Chinese, we're fifth, which is not so bad from the Middle East. Combined revenues today are about five and a half, $6 billion depending upon where commodity prices are. And we are the largest joint venture between the Emirates of Abu Dhabi and the Emirates of dubai. It's a 50, 50 JV.

What's it like being the treasurer of that group? As we said, you came with this totally different background. You know, some guys have come up through the treasury route and you know, Treasury, Treasury, Treasury. Oh, and I'm the group treasurer. You came from this risk background and you know, that's a real fundamental of you and your background. What's it now like being the treasure of it?

There's no two days of the same. So look, we employ 8,000 people. So in 2014 we confirmed the merger. We spent probably two years doing the integration, getting that done. And one thing is that my shareholders very ambitious and quite challenging of management, which is great. So most companies would probably do one or two mega projects every 10 years. We decided to do two mega projects at the same time. So we embarked upon a three and a half billion dollar spend on an alumina refinery. And to make aluminium very quickly for your listeners, you take a red bauxite type mud clay material out of the ground called bauxite, which has got a higher alumina content. You crush that and then you refine that, that bauxite through in a refinery and you produce alumina, which is a talcum powder type material. Then you take that alumina, you throw it into a big bathtub, you throw some anodes and cathodes and a bucket load of power through it and then you make molten aluminium. So we decided at that time in 2014 that we were going to be vertically integrated upstream and we kicked off a three and a half spend on an alumina refinery in Abu Dhabi. At the same time we decided that we also wanted to go as far upstream as bauxite. And so we'd already had an existing partnership with a number of partners in the Republic of Guinea in West Africa, on a bauxite mine concession. We took a preemptive position over that and purchased 100% of those shares in 2013, 2014. And so we decided that we would actually kick start that project almost at the same time. And that was about a billion and a half dollars spent. And so we had two mega projects of about $5 billion capex going at the same time. So from a Treasury perspective, we had a lot of balls in the air. I think probably what served me best during that time was the historical risk management approach. Rather than being overawed or stressed about, A, the debt levels that we were taking on board, B, continuing the operations, because don't Forget, we had 1.6 million tonnes of aluminium we were producing at the same time. That it was really prioritisation, it was really about continuing innovation in our technology on the treasury front and the continuing education and upskilling of our. Of our people. And that's all a risk management approach. And I think that was really what I learned from the last 15, 20 years coming into that role. Not saying you couldn't have done that, but I think if you'd come up through the normal treasury ranks with what we had going on at the time, it would have been completely different. And so that, that variability, that ability to be in Slovakia one day and the United States the next, dealing with something completely different really stood me in good stead during that time. And I think that's how we actually managed that period.

And you talk there and I want to pick out the education and upskilling of the guys, because there will be people listening today going, they've got teams, they might be in some different locations. Treasury, if you like, is a mature industry. In the uk, it's a mature industry. In the US is semi mature across different bits of Europe. In some bits it's mature and other bits it's not. In the Middle east, it's still developing rapidly. There's a lot, wherever the act, you do a lot of speaking and stuff like that, but I want to come back to that separate thing. But the education upskilling, you see that as key. What was it like when you got there and what did you then. How did you then approach it and sort of develop the guys?

Look, when I first came, I think that's very right. The ACT had only just started their presence here, I think, in 20 2008, 2009, probably, again, against the backdrop of GFC, it wasn't a great time to do that, although there was a big support from some of the big treasurers. And so very early on I looked at the treasury qualifications of my team and that was what a team of 10, 12 people at that stage they were either finance graduates, they were either accounting graduates, et cetera. And that was great, but it didn't give them that basis of pure theoretical Treasury. And some of these guys have been working in that team for 10, 15 years. Cash management, liquidity management, FX interest rates, etc. But it was quite obvious that they'd learnt the practical side of it, but not necessarily the theory underpinning that. And so we quickly embarked upon a program of the heavy support of the ACT qualifications. And I think today was that 10 years later, just about everyone in the treasury team now has one, if not multiple of the treasury or the act treasury qualifications. My Assistant Treasurer is just doing the MCT final exam, I think yesterday. That's been an 18 month battle for him against the extreme busy backdrop of having a normal life, a family and just what we've got going on. But the personal growth I've seen with him over that 18 months has been tremendous.

Do you mean by that when you say it made him just a better treasurer, a better person? What would you pick out?

Look, I think it's made him more aware of risks, more aware of Treasury. Don't get me wrong, this guy is a rock star in terms of his intellect, his ability to manage treasury, but he was just not quite getting the strategic side of it. Yeah, and that, that's fine, but he had an enormous amount of experience. This has just opened his eyes up to a different stratosphere of what treasury is and where you can actually go with it. I would encourage maybe not the mct, but the amct. And I apologize, I know that the ACT have changed all their acronyms now in the way that they do their courses, but every week for any, any aspiring treasurers or people just starting off in the industry, have a look at the ACT or similar qualifications in your own areas. Because I really can't stress enough is the satisfaction and the understanding that you'll get. There's not easy courses and that's what I like, but all my team have actually grown exponentially through that formal qualifications in specific treasury areas, not accountancy, not finance, not statistics or stochastic models, but in actual core fundamental Treasury.

And I'll tell you what I'm going to do, I'm going to point people, we'll put in the show notes to treasuryskills wheel.com that's something we put up there. It's like a training assessment tool for people. It's free. It was when I was doing the Chicago speech a couple of years ago, a year and a half ago. It was from my first 70 podcast with people just like you. My ex colleague, she got to go through all of this stuff and Summarize what the 70 Treasurers have said was key. And exactly as you just said there was about risk management and everything else, but studying, you couldn't take it away from you. Sarah Jane hall at GlaxoSmithKline said exactly what you've just said there. Get as many studying things under your belt. But one of the key things that did it also highlighted some of the other bits in the reel, which I'm going to come back into with you, Toby, because I noticed this very much. But guys, just go there, there's the skills word itself. So you can actually mark up where you need to, exactly as Toby says there. You can then assess where you're up to in qualifications and do you need to do more? What do you need to do? And look at some arrows. And it's a really good. It basically broke down the soft, hard areas like the qualifications, but then we went to the outer circles, which were the softer areas. I'm not saying Mr. Shaw's soft, you know, he's anything but. But the softer skills were about spe, public speaking, communication, as I said to the. I've said a couple of times, I broke out my usual pitch and I said, you know what, I don't like speaking, I don't like public speaking. Why would I stand in front of 80, 100 people as I was and just like Castigames, oh, look at me. You know, but it made me a better communicator. We get more business and we've grown our profile. Different for yourselves, you know, but you've elevated your profile as a treasurer and you, you very much embrace this sort of, you know, get on the speaking circuit. You've done Euro finances, which. And I've seen some of your speeches. Brilliant. A lot of the time, more technical areas, but a lot of the time, you know, with the Financial Times, with. Why do you feel that is, you know, bar the free booze. That's it. I'm joking. But why do you feel that's important to you as a treasurer, to get out there on the road? Surely you could just put your feet up and, you know, away you go sort of thing.

Yeah, look, you could. I Mean, one is, I enjoy actually interacting with other people. And two, and this might sound a wee bit flippant, but I. I do actually think that we all have a responsibility in the industry to give back and to share our knowledge, to share our experiences. And I do find myself incredibly grateful for the company that I work for, that they've given me the license to do what we've done. And there's not too many other parts in the world or too many other companies in the world that would embrace the speed of change in which we put things through in, in Treasury. And we were talking to some treasurers the other day from some FTSE listed companies in, in the UK about robotics and RPAs, and they were only just getting around to actually thinking about them and they were absolutely dumbfounded when we said we had 60 RPAs or bots already in treasury and we had a target for up to 100 by the end of the year. And that's the sort of speed of change that we're doing, because we simply couldn't do the volumes of transactions that we do today without an army of 30 or 40 or 50 people. I've got 15, which is still a big treasury team. But in terms of the volumes that we do, the risks that we run, the fastest growing area, unfortunately for me, is Covenant Compliance and governance.

Oh, sexy areas. Wow.

It was not a sexy area. But look, I think we had a conversation with either you, Michael, or someone else before that. Treasury accountancies or accountants are in big demand, and I think they are, and I think that's a great skill. I would also countenance that in saying treasury, corporate governance and compliance people will be in greater demand going forward. And so everyone wants to work on the front desk, the dealing, the trading desk, et cetera, which is great, that's the sexy part of it. But in terms of really understanding treasury and how it all hangs together, is that accountancy side or the compliance side is never going to go away.

Yeah. And it's amazing, actually. And with you as a treasurer, you've got all these bots, you know, have you got a bit of an understanding yourself or how have you developed that knowledge yourself?

I'm glad you have a phrase that way. I have a bit of an understanding of how I do it.

You don't have to. The reason being, I don't know if you met Severin from Honeywell, she's an amazing lady, but she's actually trained herself to do that robotic stuff. So when one of the guys, one of the techies was sitting there going, oh no, you know, you can't do it like this. She went, hang on. She leapt in the desk and was, oh yeah, blah, blah, blah. And I meant, how do you know that? She went, I've trained myself for the past year. I actually sat there and went, I don't know how you do that because it's just completely out of my warehouse. But amazing to just do that stuff.

I have a good conceptual understanding. Yeah. And again, I think that that comes back from the risk management perspective from, from the different backgrounds. A lot of what we've done, as I say around the, straight through processing, around the FTPs, we've now moved on to seamless integration. Now between our, our SAP, which is our ERP system and our bank payment platform. So we're not using STPs or any of the bank platforms anymore. We're taking all our payments from SAP. We've got rid of local footprints, which is where the file was actually downloaded and uploaded, because that was causing a bit of a security risk for us. So we've got a virtual handshake now, all these things. That was our strategy. Now can I actually implement that? No, but I'm quite good with the vision saying this is what we need to achieve. And we're even rolling that out now, West Africa, into our operations in guinea, trying to actually then the next step is take everything that we developed at center and roll that out into our overseas operations.

And you're moving, as you say, if you constantly move in that direction, you know you're going to keep getting more compliant, getting more robust and everything around it. So that's brilliant. And looking at the future, you know, with yourself and as you see it evolving, obviously we've got that robotic side and you know, getting that in place and you know, as you very well rightly put, you know, if you're listening today and you're into governance compliance, call me, don't call Toby. You know, I need the people, you might need people. But anyway, but joking aside, you know, I've definitely seen that that's been actually something that again was on the treasure skills about this sort of technical side. You don't have to go and study robotics, but having an understanding of how you might bring together those, you know, now it's different people. You know, 10 years ago it was bringing in SAP experts, as you say, and getting that implemented and everything else. Now it's like, right, yeah, we've done that next stage, which is amazing. Other areas or where else do you see treasury sort of growing Developing, because as you say, you've got this again, I've talked about it in one of my videos recently about there are some treasures that just turn the handle cash managers, da da da. And then we've got thought leaders, slash visionaries. And not blowing too much smoke up your mind, but you're looking at that direction. What else do you see as being key? What else do you see as developing?

Sort of, I think the next two big areas for treasurers to really look to focus on, in my view at least anyway, and doesn't really particularly matter which order the risk transfer mechanisms, that is insurance, what's your strategy around that? And taxation, where is your tax liabilities, where is your tax exposures? And if I can spend two minutes on both of those, is the insurance industry is changing and it's ripe for some sort of mega trend and mega change. It can't continue as it is. And if you speak to most insurance brokers, Lloyds have been there for 400 years. We can't deal without the trading room in Lloyd's or we've got to be in Lloyd's, we've got to be in Leadenhall Market having a pint at four o'clock in the afternoon and that's where we do our business. Well, the last six months has actually proven that they can do their business from home. And I think it's really an industry ripe for disruptive technology and disruptive financing. And so my advice, if you're running big insurance programs, which we do of many billions of dollars, is really look to understand those programs, understand where your risks are and understand your risk transfer strategies around that and spend some time strategizing about what that might look like in the next five years. Then on the taxation side, with the OECD BEPS legislation coming in a few years ago, the tax landscape has changed considerably. People might sit there. Sydney, are we sitting there In Dubai, the UAE, you don't pay tax, etc. Well, we are starting to. We had a vat introduction in 2018. We were a global company, so we created taxable presences in many different countries. And it's an often underlooked area of finance. But I think that there is a natural fit there with the treasury team in terms of financial risk management, reputational risk management, and of course really understanding how the business does its business. And so part of my wider portfolio happens to be group insurance and group tax and I find that that's a nice neat way of actually tying in everything. We had some discussions around as a prime Example of that with our operations in guinea around the thin cap legislation. Now, okay, so that was raised by treasury, but they had to work very closely with the tax to actually understand the implication, understand the legislation, understand the tax position around that. So there is a nice synergy between those areas.

Amazing. The worst bit about this is. Well, number one, there's Toby, who's about to tuck into a Bloody Mary because he's. And you can hear the lovely sound of the palm trees and stuff. I wish you guys on the, you know, could hear this, but we could just talk for ages because this is just. Just brilliant content. But unfortunately we can't because we try and keep the shows every. Every week to sort of half an hour, 40 minutes, which used to be everyone's typical commute time. Doesn't happen anymore. No one's commuting. Exactly as you say. You mentioned about Leadenhall. I wish we were back there. But exactly as you say. I think it has proved that, you know, homeworking is here to. And you don't need to be, you know, shaking the hand of this guy and that guy. But again, I would. I'd love. I've got three or four more questions, but I don't have time for them. What I'm going to do is we're gonna move towards the end of this show and we're gonna have Shaw back on. I think we'll do a special edition with a few other treasures because I think there's some great stuff to be chatting about and we'll do that in the future. But for today's show, we will put your details, your LinkedIn profile in the show notes. But if you can summarize for some of the people listening today, you know, you've got that different background, which I think is brilliant because it gives a totally different angle to a lot of other people. But what would you say are the top two or three tips you would give to people listening today? They're sitting there, they might be a Treasury analyst, you know, thinking, oh, what do I do? Or deputy treasurer thinking, oh, okay, maybe I should do the mct. Or they're a treasurer out there say, oh, you know what, the wars. What are the things that you would sort of give them as tips, if that's the right way. Over to you, Toby.

Yeah, thanks, Michael. Look, I think my top three tips for anyone aspiring to progress their career within treasury is be courageous. Treasury is not like the other parts of finance. It's more dynamic. And there is a lot you can actually do in that space. If you give yourself the opportunity to be courageous, think about out of the box thinking, how can you make your processes better? Whether it's through robotics, whether it's through restructuring or redesign. Treasury should and is a dynamic segment of finance, much more so than be bound up by ifrs accounting rules and so that there's a lot to actually play in that space. Second is really take control of your own education. If you're a chartered accountant, if you're a financial analyst, you're a business degree major. Fantastic. That gives you a great fundamental basis. But you really do need to actually have those specific core treasury theoretical knowledge. And without that you may actually struggle in the long term to understand the intricacies of cash management. And you'll be never surprised me in terms of people, senior people I work with around the world that really don't understand or acknowledge the intricacies of actually making sure that your cash liquidity profile is accurate. And there's a never ending balance between yield returns on your money market deposits and actually having money available to pay salaries. Is it in the right bank account? Where is your cash? It's a complicated part of treasury which people don't give enough credit to in my view. And third, I think really it's look at those areas of treasury with some interest. I just mentioned cash management, but compliance, governance, I mean that is an extremely interesting area. You get to delve into the loan documents, you get to look at the complete debt profile. You understand the business, how it's structured, structured, you understand your leverage ratios, you interact with the banks on a daily basis. Again, it's not the sexy part of treasury which is the so called trading desk and wheeling and dealing on the front, which we don't do, we don't do prop trading. Just have to actually put that in there. It is quite a fascinating area as well. And I think those sorts of things is what makes treasury really dynamic and fun to be in.

Yeah, and again I would pick out there, I think all of those point to the future, if that's the right way to put it. Talk about the dynamism, you know, controlling your education and moving it towards, you know, future proofing yourself, you know, and that's ideal. Mr. Shaw, amazing chat and yeah, I'm seeing you there, sitting there, you know, it's getting hotter and hotter. He, he needs to retire to a bar somewhere. It's, you know, we've had enough of this. He's, he's very kindly, I've got a coffee, he's got, you know, water in his hand and he's been very good, but now he needs to adjourn. He's taking time out of his weekend, so I really appreciate it. And Mr. Shaw, that was amazing. If you want to connect to Toby and he's part of the, you know, the network, as it were, we'll put the LinkedIn profile in the show notes so you guys can connect. Thanks for today's show. Absolutely brilliant. We'll. We'll definitely have you on in the future. Thank you, sir.

Perfect. Thanks, Mike. And pleasure to be here.

Thank you, sir.