Why Treasury Is More Important Than Ever in a Company with Ramez Sabawi

Foreign.

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 them about how they build 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 I'm joined by Ramez Sabawi, the treasurer at Saudi Aramco Total Refining and Petrochemical Company SAT or as they call themselves, they're the largest state of the art refinery in the Middle east and across Asia with a refining capacity just approaching 500,000 barrels. But as I say each and every week I'll get Ramez to explain that a little bit later in the show. He's also the head of corporate Risk and Investments. We've just been talking before the show. He's got incredible story over 29, 30 years, you know, traveling the world, moving through different industries, different geographies and really proves that treasury really does take you on this international, global treasury career path. Which is, as I said to Ramez, one of the reasons I love talking to you treasury guys each and every week. Enough for me as always. Ramez, take us back if you would and how you got started in your career and, and then you discovered the world of finance and Treasury. Sir, back to you.

Finance and treasury was always a real passion for me since my university years. I started basically my real step in my professional career in London in the early 90s, where I started in banking industry actually.

How come, how did you start banking?

Banking was always a passion. Even during my university years I used to train with one of the banks during the summer holidays. So I always had something for banking. Definitely this is where I started actually in banking and it was a great step going forward when I shifted my career to Treasury. That basically the banking industry in my opinion gives you a very broad opinion about all things to do with financing, with corporate relations, how to actually initiate corporate relationships, give you the fundamentals of the financing when it comes to corporate finance, trade finance and this is what I did in the bank and also we did a lot in banking in London, you know, trade shares and we did a lot of pre export trade for oil. So I mean I managed a lot of customers in different industries. This gave me a very solid base.

Basically for the people listening, that was for Europe Arab bank. And you know, I like to ask people about that because obviously then you got into your treasury and some of the corporates, you work for Europe, you know, with that role, obviously given your background, you Know, maybe even go back a little bit. You're actually an Australian citizen by birth, but you've got this international flavor to you as a person. Can you explain that for the listeners? And then let's go into Europe Arab Bank.

Yes, I am an Australian citizen. I had my education in Australia. My family been in Australia since the early 80s. Originally we came from Jordan. I had always, you know, a very rich grasp of different cultures. I do speak different languages. This always helped me across the road.

So you had that background, but then when you were just talking then about managing customers and things. So you're a power of bank. Who are they? What are they? And then how did that then lead on to your other roles? I know, because we talked about this, but you know, again I'm playing the role of a listener who's listening today going, hang on, where did he start? So go on back to you.

Europe Arab bank is actually a UK incorporated bank. It's fully owned by Arab bank plc. It's one of the largest private banks in the Middle east and one of the oldest. I think it's now it's around 85 years old. It has a massive network across Middle East, Europe and America. My client base was not only from the Middle east, but also I handled the Scandinavian area. Very big companies, big names like at that time, Nokia, Ericsson, abb. So I mean, we had a variety of customers we were handling and we built up an excellent network. Some of the also oil companies we used to handle from the bank, very central operation in London where we have the majority of the international transactions booked in London. And this gave us tremendous exposure actually to all kinds of different transactions which was booked and, you know, handled through our London offices. I spent there around seven, eight years. And then I moved briefly to Creedy Agricole in London as well. Also in trade, finance, corporate banking. It was a very good experience. And then I moved back from London to Jordan where I had the family links there. And then I started from there going through the treasury on the corporate side. This is where the big move happened. I started in Jordan with DAR Group, Dar Alhandasa, one of the largest engineering consulting companies in the world. Actually they are the sixth largest in the world. Very low profile though. I was the head of treasury and banking coordinator for around eight years. We did fantastic work. It's a very expanding. We did a lot of expansions. We had work in Africa and Latin America and North America and definitely in the Middle East. We managed corporate treasury at that time in a very efficient way. And I Started getting into treasury more.

Or less actually another when we had our pre call. Can you describe again what the group did? And then actually it was quite an interesting one because you'd sat the other side of the table. You knew when you were working with your banking partners what they were looking for. Sometimes they might come in and say, well, give us. Well, hang on, I've got this information. Oh, hang on. How do you know to, you know, you knew what were their drivers were and what their issues were. So how did that influence you in treasury terms? I know that's terrible because I've asked you three questions at once, but I do that again. Can you explain who the company was and how that, you know, your previous banking background gave you that advantage, would you say?

Yeah, I mean basically Daryl Handes only used to get involved in infrastructure, mega projects, the designing, engineering and management of project. They were not contractors. They used to rely a lot on old treasury advice and intelligence and feedback from the banking side at that time they had no proper Treasury Department as such. And when I made the move with Daryl Handasser, actually I started having all these treasury activities and the analysis and all this done in house and it was actually during a time which came right time but by that time banking started to limit their offering of intelligence when it comes to treasury due to regulations and costs involved. Previously, I mean what I saw from DARP before I joined them, they never had. I mean for them treasury was only FX deals and just payment transfers and very, very straightforward plain vanilla stuff. They were never involved in more strategic planning, balance sheet construction, how to actually expand the banking relationships. So all these I managed successfully to add to my profile and improve the treasury profile at dar, for example, I remember that when I first started they had credit line of around 30 million and when I left them after eight years, we had credit line with different banks, some of the major regional and international banks exceeding $200 million. The last thing I did with them was actually to get them S and P investment rated. They kept it silent but it was also a fantastic experience for me as well. We did it with S and P in London.

So you brought that in sort of that real treasury rigor, but that sort of brought you onto your next role with Kuwait Telecom. Again, talk us through that move and an interesting one for you I think as well at the time. And then we again, looking back at some of my notes, we sort of. It was a good step up for you as well. Talk us through that.

It was, and it was actually amazing opportunity for me I was headhunted by STC who is a Saudi telecom company. They just started their new license of mobile operator in Kuwait. It was a $1 billion investment for the license and they wanted me to join as Treasury Director. Basically it was a green field. We established everything from scratch from policies and procedures, picking up the team, creating all the procedures going forward, how we established this department. We started like we were four, only four individuals across treasury and Finance. We end up with more than 45 people at the end. So it was a great experience for me that to be involved in a company from scratch. We see it growing day by day. When I left the company, STC, which it used to be called the STC Viva and now it's SCC Kuwait, it's 79% as far as I know is owned by SCC. When I left them, they were in amazing shape. We've seen a lot of challenges in the beginning of course you have to understand that when I first started with them, it was 2008, it was during the global economic crisis where banks basically closed all the taps. We had no source of funding, very limited. And we had the limited capital at that time because it was a Miri decree company and the capital was set up by the government. So the capital was never enough for our expansion. And for our CapEx, our CapEx was like fourfolds what our capital is.

So how did you get over that? I mean was it all joint ventures or was it, you know, you were in this difficult situation.

I think I learned a lot from this year that basically we had we reach at one point at the negative equity in the company. But basically what happened is, I mean SEC at that time didn't want to expand or give any corporate guarantees, which is understandable. They told us look guys, you have to stand up on your own. Basically I managed how to deal with our vendors. Our main vendor at that time is Hawaii if I can mention it. So I mean I had an extensive meetings with them. We managed to have a deal where we actually restructured the debt. The main debt was mainly for them because they were network contractor. We are talking about $400 million at that time. So I mean we managed to have to restructure this debt with the help of ICBC as a guarantor. And we basically it's a vendor financing transaction done in an Islamic structure. It was very unique. It saved us a lot of money. I mean the rate we got was fantastic. And we never actually had to borrow from banks. We never had to put any assets as a security all our assets remained free of charge. So, I mean, at this stage, we managed to restructure the debt across three years from that point. And when I left it, it was all repaid successfully. And I'm very happy to say that we got highly commended deal of the year from ACT association of corporate treasurers in 2011 for this deal. And it was a great step for Kuwait Telecom company. It actually put it like a springboard. And from there on, it was success. Every year we managed to grasp more share in the market and we end up number two in the market. And by the time I left them, they had more than $150 million deposits in the banks. So you can imagine this from a situation of negative equity, how the turnaround was fantastic.

Ramez, I just want to go back, stepping back for a moment. You said that they didn't have a Treasury, and then over eight years, you grew this Treasury. And I was listening to one of my, or a couple of our previous listeners. They were going back through some of the previous episodes where they're in a startup situation. It's not a startup company by any means, but it's a startup Treasury. They're the first treasury person through the door, first real treasury professional. There's a finance guy, he's saying that we need a Treasury person, can you come in? And he was using, going back through some of the previous episodes. Lovely. We like the listener figures. But he was going through for a sort of a bit of a check checklist. Now you've come, it's brilliant. You've got the banking background, so you know what those guys want. You've got the treasury background, you've established that before, but you've come into that mega size of company and in. In a bit you're starting up a Treasury. What was your checklist and what's your general checklist? If someone's listening today, go, oh, actually, that's a good question, Mike. Yeah, I'm doing that. What would you say? Is it about right, where's the cash or where are the exposures or where's the hedging or everything? You know, where do you start? What's the sort of the tick list.

If you like, all the points you mentioned, it's very important to have them in full sight of when you start any planning to have to establish this treasury operation. But I mean, for me, my main focus was actually the banking relations. By the end of the day, I know that what other sources I have for funding from the shareholders, it was very limited. I mean, so I Had to stay start knowing my knowledge and experience in banking I knew exactly what banks are looking for when they used to come and meet us and they ask questions. I know exactly why they are asking these questions and what sort of answer they are expecting. So I mean I built up a fantastic relationship with the banks. We had banks coming over later on to help us and work with us from not just from Kuwait but from different countries in the region, from international, we had visitors from from all over the world. Now once you know how to tackle it because I mean treasury, how I see it Mike is basically we are the window for the company where actually all banks look through. So we are the first point of focal point between the company and the banks. If you manage to handle this relationship and know exactly how to deal with the banks this will open a lot of opportunities for the companies. And this is where I feel that my previous banking experience really helped me to create this link between the banking side banking industry and the corporate treasury because there is very strong link and should be very like a natural sync and harmony between both. If you understand the psychology of both sides you can actually manage it well.

Yeah, you can match it and things. You made the move, you made a move from Kuwait. You've been buried.

Yeah. I was headhunted again after being fantastic eight years at the Kuwait telecom company headhunted by Qatar Navigation called Melaha. It's a trade name, it's one of the largest companies in Qatar with commercial registration number one. They are involved in trading, logistics, shipping of gas or the gas out of Qatars shipped via their vessels. So it's a huge operation. You're talking about 7,000 staff there. I went there as vice president corporate finance and treasury and I spent nearly two years there. It was a great experience as well. We had some challenges during that time. There was sanctions issue on Qatar which gave us additional challenges when it comes to finding sources of hard currencies. We managed to handle all our obligations in a very satisfactory manner at that time my family moved back to Australia and I moved with them after a while and then I came back to Dubai where actually I feel I'm very linked to this GCC area. By that time I started my own advisory management advisory company in Dubai and I had a very good partnership with other advisors as well in the region and we had excellent portfolio of clients and we worked very well for two years where we had the COVID started but we still managed because we were very small team, flexible and we are easily. We can move around and we can Accommodate all changes possible in the industry. By that time I had a contact with Sator and I felt that this is an amazing company, amazing name with a very strong shareholder structure. We are talking about Saudi Arampu at 63% and Total, the mega French company at 37% and being treasurer for Saudi Aramco Total is something opportunity in a lifetime, I think and it was a great step for me. I took it up. I've been there now for seven months. We had so far many challenges but actually we started doing great work and I'm happy to be able to create value from day one actually. And this comment I've heard a lot, I'm very proud of that. Obviously we have great team with us and you know you'll never be able to achieve unless you have a great team with you as well. The atmosphere in the company is fantastic. We have a great culture, very professional and actually very happy to say that only last week we've been notified that we got an award by CFI Capital Finance International for the best innovative project finance deal in GCC area for 2021 is an amazing transaction we finalized recently. We managed to create savings across the board and this is my opinion this is what the treasury role should be. We are no longer just, you know, just checking and counting money coming in and out. We are now involved more and more into strategic decision making and planning and creating value where we can, you know, streamline our financing in order to create savings every possible way. And I'm very happy to see that. I always have this idea of not, you know, pushing but basically to put the seat of treasurer in the proper place where I believe that it's more becoming more at a strategic decision making rather than operational level. Recently I just came back from Paris where we attended the board meeting and I was very proud to be presenting in front of the board the cash flow and liquidity mitigation presentation there. So going ahead we are always planning to put the treasurer position in a more focused strategic be involved in the decision making. And this is where I believe it should be always, especially with what happened in 2008 and this global crisis. If you look at it, Mike, if Treasury had more say in such situation, which errors happened, I think would have had better results coming out of that.

Yeah, I remember and again that was great because he brought in one of my notes from our show before that and as you said that treasury had a seat at that table, you don't think it would have happened so much, is that right?

Exactly, exactly. Especially with change of regulations and more restrictions. Now when it comes to Basel III Frank Isocheck IRS section all these new regulations imposed on banks, it's actually limited what banks can do and shifted a lot more power to the treasury on the corporate side. Nowadays major corporates, they rely more and more on the Treasury Department which is becoming now fully fledged department. It used to be an offshoot from the accounting basically or the finest nowadays. I think we earned our legitimate role and our glorified position where we actually have more risk control, more measures put in place. We are more involved into managing risk not just within the corporate but you are talking about geography, political, national. We look around us and we try to protect the company from all possible risks. Not necessarily what we used to do before, which is very classic that only the FX rate and interest rate. Now we are, we're looking at much, much more challenges. I think the treasury role will expand and grow more in the future. This is, I believe it will be a focal point when it comes to managing corporates. Definitely they'll have a seat on the board. I can see it very, very soon before we.

I want to explore that a little bit more and we'll talk as we do, you know, move from, you know, the first half of the show. We usually focus on your career and things and then some of the other views you have on Treasury. Was coming to that but just wanted to step back to something there. You talked about Saudi Aramco being majority shareholder and then having, you know, sort of a another shareholder and things like that. How do you not answer the question? But some people might be con concerned that, well, hang on, are you just beholden to them? You know, how do you deal with those relationships or how is your role different if you like, if you're a 100% public company, you know, out there traded and everything is how does that feel? What's the differences for you as a treasurer or is it exactly the same? What do you think?

It's never the same when you have mega shareholders like those. But I mean it just adds up to our skills of dealing with like how we used to deal with banks, how we used to deal with corporate clients when I used to be in the banking industry. You have to know exactly how to address the shareholders, how to best use the synergy and making it work to your advantage. Our shareholders are very professional entities. They are very demanding, which is understandable when it comes to reporting and sourcing information and exchanging all information and knowledge. But we also benefit from them a lot when it comes to using the synergy power we have with Saudi Aramco when it comes to their authority, for example, and strength to procure some kind of services, we always combine our requirements together so we can get the best offer. So whenever I can benefit from this synergy, I do it. So I mean, I don't see it as a disadvantage to have a powerful shareholder. Actually, if you think smartly about it, you can actually benefit from the synergy. You can benefit out of them.

It's a positive thing rather than a negative. It's actually as you say, it's more like bank relationship management, which I think is a good way to view it.

So I think definitely and it does help us when we talk with banks as well. I mean one of the first point I can mention to banks that look, if you want to analyze my risk, just look at the shareholder structure we have. This is an additional positive point when we discuss with banks, we all know how Saudi Arabia with a great reputation in the market, they are very financially very, very strong, same as Total with their international experience. We consider ourselves at SATRP are very lucky to have such a strong shareholder structure. We have.

So as I said earlier in the show, we tend to now we're not that far from the end of the show, but we're not quite there yet. When you look at treasury, you've obviously done, you mentioned there about the act, you've mentioned about the different things. You've got this wealth of experience across all these different countries and things. Where do you see treasury going? Where do you see the, the opportunities now as the world sort of has recovered or recovering and coming out of the final stage of pandemic? What do you see next for treasury as it were?

I think treasury has a great opportunity and great future because basically corporates rely more on the work done by treasury to protect itself from all potential risks, financially and market risks, any exposures. Treasury will be more treated as an integral part in the management structure of any company. So definitely a career in treasury has a lot of future coming and I can see in the coming few years, not very far from now, they will even have more importance on a strategic level because of what we are seeing in development in the market. As you know Mike, now we are approaching this cryptocurrencies, all this smart payment structure, digital banking. I mean so all this is an extra challenges in any corporate. The treasury would be the best suited to deal with such real risks coming.

I wrote an article a few years ago and this was post as we came out one of the recessions And I said and I'll republish actually. Will the spotlight move away from treasury as the market recovered and will it move back towards more sales and regrowth of businesses and things? And I've got to say at that time I think it did. I think the spotlight because treasury, everyone a year ago was turning to treasury going wow, tell us about the balance sheet. Where are we numbers wise, where's the cash? And everything was going on. But I do think it's slightly different now. I think the treasury has proved its worth but again there is still a danger right now in the nice way, nicest way. They were talking to, I remember the recession, the treasurer, one of the treasurers at the time, he said to me, he said the amazing thing was the CFO and I had a coffee every single morning and we went through the balance sheet and everything else. And he said actually has it changed? He said, didn't mind so much. It was then a weekly coffee but then later on it became a monthly coffee and actually treasury became less written. It was still there but it was oh, actually we don't need to worry so much. It was sort of a peacekeeper if you like. How does treasury ensure that it doesn't go down that path if you like, we don't need to worry anymore.

I don't think that treasury role is only valid and needed when only we have turbulence in the market. I think it's a long strategic role. Definitely we prove our value and our benefit to the company on a daily basis. When we are starting now to be requested to address the board directly, for example, not just the CFO will do that but also the treasury because from a risk perspective we are more aware of risk issues when it comes to near future and you know, medium and long term risks than any other body else in the company. So I mean we are positioned in a way in my opinion that we are better suited to address all those summing up risks. And Treasury I'm sure not evolved already out of their classical role. Now we are adding more and more job titles and more and more duties and KPIs and goals to our overall department to ensure that we have a long term benefit to provide the company. We will never be able to just limit our role whenever we have a crisis then we'll get the treasury involved. I think it's a long term involvement.

I agree, I agree. And I think just before we go we're going to go to the LinkedIn piece where I say about putting in your LinkedIn profile, but I loved There are a couple of phrases I wrote in here about the treasury is a real window into the company. I think one of the key things as you're referring to there is that it's a windows two way both inward and outward. And I think that outward thing is key will the spotlight moving away. I think it's about proving that value with Treasury. So Ramez, we'll put your LinkedIn details in the show notes so that people can connect to you. But as they look back through your LinkedIn profile they will see this truly global international treasury professional that's moved through his career and everything else and you know they go oh actually I want to do that or that looks like sort of I would like to replicate that. What advice would you give to the listeners today before we wrap up today's show? That what they should, you know, some do's and don'ts or what are the top tips that you would give if you like. So what would you say?

I think first of all I want to say that I was very lucky in my professional career to have such a wonderful experience across many countries, many industries as well. I worked in banking, in telecom, in logistics, in construction, gas and oil. So I mean I touch base with many industries. Basically my advice for people who wants to pursue the treasury career is always combine a fair balance between experience and education. Nowadays there are very specialized courses in Treasury. There are no longer just available finance or accounting but you can have treasury based certificate and there are plenty of very high good quality treasury certificates available globally. This will always give you the upper edge, it will refine your skills because nowadays treasury is becoming more focused. It's not just general science but it's actually you have to be specialized maybe in hedging, in corporate finance and M and A. So I mean that you will find plenty of courses to support your career. Treasury will always give you a better opportunity going forward because I mean this is a section in corporate across many industries that will grow and grow and I think it will have more and more important role in the future. This has proven me correct across 30 years and because I saw how treasury used to be 30 years back and how it is looked at now, definitely the improvement is incredible.

When you first started in Treasury I started in treasury recruitment. You know I saw as this very ivory towered, you know, sort of and I think a few people were guilty of let's make it this specialist area. But now it really is out there in the business, isn't it? And I think that's the thing you prove through your career.

Yeah, yeah, definitely. I agree with you.

So amazing to chat to you. We'll put your LinkedIn details in the show notes so people can connect to you if you feel it's appropriate to have them in the network. And, you know, thank you very much for your time today. It's been amazing to chat to you as always.

Pleasure, Mike. Thank you very much.

Thank you, sir.

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.

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