Managing Risk and Opportunity through Uncertainty

SUBSIDIARY EXTERNAL FINANCING Required Approval Level While 51% of companies surveyed reported that subsidiaries are permitted to borrow funds locally, 90% require approval, of which 83% from Central Treasury. Among those that do borrow locally, 48% benchmark local borrowing lending costs based on a panel of local banks. 11% 6% 90% 83% 10% Subsidiary Borrowing Approval Requirement Benchmarking of Local Borrowing Lending Costs Subsidiaries Permitted to Borrow Locally 10% 6% 48% 36% Central Treasury As part of revolving credit facility Other Based on panel of local banks Based on corporate cost of funds No Other 49% 51% Yes No Yes No INTERCOMPANY LENDING 27% of the corporates surveyed have no intercompany lending policy in place. In determining when a subsidiary will borrow intercompany as opposed to a local third-party bank, multiple factors are considered. 67% Tax considerations 63% Availability of local currency financing 61% Local regulations (e.g. thin capitalization etc.) that drive a local benefit 45% Mitigation of cross-currency risk 26% Mobilizing incremental credit capacity beyond group/parent credit capacity 5% Other Factors Determining When a Subsidiary Will Borrow Intercompany as Opposed to a Local Third-Party Bank Policy Governing the Borrowing Currency of Subsidiaries Percent of Respondents with Policy Governing Intercompany Lending Activities 73% Other Yes, always in local functional currency Yes, always in parent functional currency No, local discretion allowed 19% 76% Cost of local financing vs. cost of global financing 25% 47% 10% 32 33