"In order to continue expanding our financing activity and allocate our banking business with greater accuracy, Trafigura decided to replicate what our banks do, i.e. quantitatively assessing the profitability of their relationships. "

Laurent Christophe
Head of Corporate Finance

Summary of the engagement

  • Analysis of Trafigura’s main banks’ economic profitability
  • Optimization of cash management costs in Europe and in the US

Objectives

  • To assess Trafigura’s banks’ economic return relative to their capital employed
  • To ensure optimal business allocation among banks (i.e., a more accurate distribution of Trafigura’s wallet)
  • To determine potential optimization areas on all banking products
  • To monetize cash management optimization areas

Outcomes

  • RAROC analysis presentation encompassing global business with over 30 key banks across lending, trade finance, cash management, markets, etc.
  • Detailed relative bank mapping, individual bank profitability analysis and ST lending optimization cost recommendations
  • Improved visibility of bank costs, economic capital allocations and room to optimize
  • Substantial savings/additional yield on cash management in Europe and the US

Methodology

  • Comprehensive data collection; RAROC parameters calibration specific to Trafigura’s banking products; detailed RAROC calculation per product, per bank and comparative analysis
  • Comprehensive bank cost analysis and optimization strategy design and recommendation; bilateral discussion coordination with banks; active process management until new pricing implementation

Redbridge’s added value

  • Proprietary tool developed overtime across sectors and products allowing a precise RAROC calculation
  • Unique global database of bank service costs enabling comprehensive benchmark by country, product, etc
  • In-depth knowledge of bank fee structure and related practices in both Europe and the US
  • Objective analysis of bank offers and efficient bank negotiation based on existing best market practice
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