The applicability of a separate treasury function in a large Maltese group : a case study

Abstract

PURPOSE: Treasury management has proved to be a necessity in today’s business environment. Despite this a good part of Maltese corporations do not seem to see any value in setting up a treasury function. The aim of this study is to gather a comprehensive understanding of this reality from the view of a Maltese group. It will look into current practices of the group, and the different forms that the treasury function can take. Thus enabling the researcher to assess the possibility of setting up a separate treasury function. DESIGN: For this purpose the dissertation took a qualitative approach through the use of face to face interviews with the various parties, both internal and external. The study used three sets of semi-structured interviews, each prepared specifically according to the role of the respondent in the group. Some follow-up questions were also asked to corroborate the main topics. FINDINGS: The group embraces a decentralised philosophy that emphasises that every unit has to survive on its own merits. Thus, in conjunction with other circumstances, treasury task were scattered within different roles in the group. The findings suggest that although the group has always been able to maintain a solid financial base, subsidiaries still think that the financial structure of the group can be re-vamped in a way that allows them to take advantage of the size of the group and allows them to work towards the same goal. CONCLUSIONS: The study showed that although the group does not have the complexities that are usually associated with the setting up of a treasury function, it can still take advantage of the treasury function at a different level than such multinationals. The different forms that the treasury function can take can allow the group to tailor their best-fit and create a function that can add value to their business. IMPLICATIONS: The conclusions reached suggest that the success of the group cannot only depend on routine and intuition, but has to also work hand in hand with logical scrutiny and extensive deliberation. Companies have to establish a treasury function that is based on consideration of different factors and characteristics of the group at hand. Building an efficient and effective function can enable a company to safeguard its financial health and ultimately maximise the wealth of its shareholders.