- H+H have a strategy of being a market consolidator within key European markets
- Nordea became H+H’s new house bank in 2019 in order to support the strategy
- Nordea implemented a new global cash pool to provide a centralised liquidity overview
Based in Copenhagen and with operations spread across multiple countries, H+H is a market leader in producing aircrete and calcium silicate blocks and is one of the most well-known names in the European building industry. In April 2019, H+H began a new collaboration with Nordea as its house bank, signaling the beginning of a close working relationship.
Andres Richter Laursen, Head of Group Finance at H+H, says: “Once we decided to look for a new banking partner, our aim was to find a sole bank solution with a facility that could fully support our strategy. We were also looking for a bank with the international reach to help us in our key markets. Nordea was able to offer us things that other banks were not able to within cash management, in particular with their global cash pool offering. This can bring huge benefits to our business and the way we do things. Changing to Nordea is a very important step for us in our growth strategy. In just a few years we have gone from 13 to 29 factories, so we are on this journey where we are increasing in size and complexity. This forces us to be as smooth, lean and as flexible as possible where such an arrangement with Nordea is completely in line with our overall strategy.”
In less than two months, the Nordea cash management team completed the onboarding of H+H subsidiaries in Denmark, Sweden, Russia, the UK and Germany. This included implementing a global cash pool and corporate netbank solution, as well as opening new accounts and local payment structures in each country.
Andres continues: “The transition started fully in April 2019 and already before the summer holidays we were in a position where all of the business in our company had changed, with running and incoming payments now going through Nordea. For the Benelux countries, Switzerland and the Czech Republic, where Nordea is not present, we have established accounts out of their Frankfurt office. We are also looking to implement a solution with a local bank in Poland where Nordea is establishing a two-way sweep to accounts out of either Denmark or Sweden within the global cash pool arrangement. Definitely solutions have been found to handle any obstacles that have come our way.”
Pia Lund, CM Implementation DK at Nordea, explains: “H+H had no history of switching banks before, so the implementation was completely started from scratch. We set out to get the new solutions up and running as quickly as possible and to create a strong working relationship with H+H. A core Nordea team of experts was assembled to make it happen.”
We set out to get the new solutions up and running as quickly as possible and to create a strong working relationship with H+H. A core Nordea team of experts was assembled to make it happen.
Easy access to liquidity and enhanced overview
H+H’s decentralised structure means that each country has a local solution for managing the day to day business, while the head office in Copenhagen oversees liquidity.
“The global cash pool has been set up out of Copenhagen and we are able to split all of our cash positions into different currencies and countries where we’re able to set off positive and negative cash balances and take advantage of potential optimisation opportunities. For cash management purposes, having direct access to all of the group’s liquidity within the pool is a huge benefit. Previously, the cash the subsidiaries had built up on their accounts was left until it was agreed to make a dividend to transfer the money back to head office. As it is now, taking into account any local or regulatory requirements, whatever the subsidiaries have earned and placed on their bank accounts is basically part of the groups from that point in time. This is also an important aspect in supporting feasibility and flexibility in our acquisition strategy. As we have at all times a very good view of our cash position, this enables us to act quickly with potential acquisitions and stay on top of daily liquidity, which is a huge benefit,” notes Andres.
Niels Christian Hansen, Global Cash Management Adviser at Nordea, adds: “Previously H+H did not have this structure and used the old-fashioned system with a credit facility in each country. With the global cash pool, their subsidiaries can now lend from each other, which was difficult before because they had to manually move funds around. Now it’s all under one facility.”
For all businesses that are cash generating like ours, you need to have a proper setup for retrieving the cash. Cash is essentially the yield on your investment and has to be reinvested in the overall business environment, in line with the overall strategy of the company.
Andres adds: “For all businesses that are cash generating like ours, you need to have a proper setup for retrieving the cash. Cash is essentially the yield on your investment and has to be reinvested in the overall business environment, in line with the overall strategy of the company. If you’re not able to retrieve the cash from your subsidiaries, you’re not able to actually reinvest. The only thing that you can then do is reinvest in that specific business. If you can get a better return in other investment cases, you need to do that for the investors. Also, because it’s completely automated and once a subsidiary is in the pool, they’re in the pool, you don’t need to do any separate loan agreements. If you have to retrieve cash, you don’t necessarily have to do this via a dividend either, so there’s less administration. It’s also possible through the global cash pool arrangement to set up different types of interest charges to whatever business, depending on the risks of the financing.”
The sole bank solution offered by Nordea offers a number of benefits for H+H not least a reduction of the complexity that can occur in a split bank structure.
“Multiple banks can often mean different platforms, making it harder to get a clear cash management overview. It’s nice to have one platform and with one source of information. It’s also good to know that if we ever come into a challenging situation, there’s only one interested party to talk to and not seven parties to agree on how to solve any issues. So, it’s also advantageous from a tactical point of view,” says Andres.
During the implementation, a local country manager from Nordea was on hand to help with the process in each country, visiting the subsidiaries to explain how the global cash pool is set up, assist with opening accounts and to introduce the H+H team to the Nordea platform.
Andres adds: “Having local help from Nordea has been a huge benefit, not only in reducing the workload at head office but also establish a relationship manager locally to help with any urgent matters. In countries such as Germany for example, English can sometimes be a challenge and it is still easier to communicate in the local language. Having somebody who can speak their own language and understand them is very important. This is one of the reasons that right from the initial engagement and throughout the process, it has been smooth and lean. Both H+H and Nordea did what we could in order to support everyone in the process, to be transparent and communicative and to get it up and running.”
Multiple banks can often mean different platforms, making it harder to get a clear cash management overview. It's nice to have one platform and with one source of information.
Cooperating to success
Andres concludes: “During this implementation we felt that we had all of the support that we needed. Nordea’s IT experts helped us with integrating the payment files with our ERP system and the different platforms we use in order to make automated payments. The systems are working on all markets and in hindsight there’s not much we could have done differently.”
Niels concludes: “H+H have ambitious growth plans and we are looking forward to supporting them into the future.”
Write to Pia on pia.lund [at] nordea.dk (pia[dot]lund[at]nordea[dot]dk) or Niels on niels.christian.hansen [at] nordea.dk (niels[dot]christian[dot]hansen[at]nordea[dot]dk) or visit nordea.com/cm
Learn more about the benefits of a Nordea Global Cash Pool