Transcript
Speaker: Welcome to HSBC Global Viewpoint, the podcast series that brings together business leaders and industry experts to explore the latest global insights, trends, and opportunities.
Speaker: Make sure you're subscribed to stay up to date with new episodes. Thanks for listening, and now onto to today's show.
Speaker: Hi, this is Kai, working for HSBC, heading globally our sector business and the partnerships business. But more important, I'm here today with Andreas from Siemens Energy.
Speaker: Thank you very much for the invitation. Really nice to be here. So just a few words about myself. um My name is Andreas Meyer. I've been with ah Siemens and Siemens Energy in the field of actually energy business for more than 30 years.
Speaker: Let us go now back in in time. Let us go into, and I'm quoting your your CEO here, existential crisis for the for the company. Can you explain to it to our audience what was that existential crisis? What what has happened?
Speaker: Going back um into the year 2023, it turned out and we faced significant technology issues with some of our onshore turbine models. The height of the crisis probably occurred in the mid of 2023, where we had to post a multi-billion loss to our profit and loss statement, which really was the starting point of this crisis, as our CEO mentioned. Was that ah for you a difficult time personally or was it something you've mapped it out, you worked it through? Well, first and foremost, I became a part of a team that was already starting to actually deal with that crisis. So the main trajectory for me was ah learning, personal learning, right? And then bringing my experience of the past, particularly in change management, to a team um to ensure that this team would be able to actually meet with a challenge and learn to run at the speed that this crisis really demanded from us. So my sleepless nights, I would say, were more on how do I learn as quickly as I can, how do I transfer that learning onto my team, onto my new team, and how can I motivate the team to go this extra mile that seemed at times impossible, but ultimately, I guess, we persevered.
Speaker: I think let's spend for our audience a little bit of time on what is the facility nature, the performance guarantees, bid bonds. Why is it so important for the for the business itself? Why is it so important for the older books? We provide large-scale energy infrastructure. We have long delivery times. So without advance payment and performance guarantees, it is essentially impossible for us to book an order with a customer.
Speaker: There are no ifs and buts. It's essentially impossible. So you can imagine that for a company with a Siemens DNA, right, the provision of guarantees was never a problem until a crisis hits and then suddenly it becomes the bottleneck. And that's what we felt and that's what really fueled, I guess, our energy to try and persevere in this state of crisis.
Speaker: So now we have established why performance guarantees, why these facilities are so so important to facilitate the the business. So let's drill into the the structure. We're at the moment of crisis.
Speaker: How did you structure the facility? What were the pressure points and how did you involve the German government? We're talking about the nearly 11 billion facility. How did you structure this deal? I quote our CFO with a beautiful little statement that was, never waste a crisis.
Speaker: And with that crisis, we unleashed enormous energy to do whatever was necessary to bring our company and our processes up to speed to know exactly what we need in the on guarantee volumes, what we need, when we need it, and and where we need it. So with all of this in our backpack, we could then go approach the government,
Speaker: who was ready to help us as we were deemed an important factor, an important European factor to um continue to help the energy transition going forward. um And we could convince the government, we could convince partner banks, a consortium of banks to actually move into this new structure with us, whereby the government took over two thirds of the backstop and banks were only burdened with one third. And that was a trust-inducing measure for our partnering banks to go this mile with us.
Speaker: How long did it ah take door to door to put that facility to to together? The structure, the processes you have mentioned, never waste a good crisis. How long does it take to to put that again 11 billion facility together? Well, let me say the um the crisis event, the profit warning happened in June 23. The facility was put together pretty much exactly six months later. So I would say ah from ideation through formation, negotiation, ultimately wet ink, six months.
Speaker: So when you structure the the facility, why why did you do it as ah as a bridge facility? I would probably say that calling it a bridge facility doesn't do it justice.
Speaker: But I would say, naturally, asking the government for help in this situation must only be or can only be a bridge because there are certain strings attached that one needs to accept in the event of crisis but probably are difficult once the crisis is over. ah Such things is, for example, a ban for the company to um pay dividends to investors, which is a significant ah problem, particularly once the company evolved again, recovered again and was able to pay such dividends.
Speaker: The cost of the facility, of course, was significant, so we couldn't help but think from the beginning, what is it that we need to do to actually see it as a bridge and then go for the next thing that replaces it as soon as we can, as soon as our balance sheet has recovered from the profit shortfall in 2023. And oh boy, it has recovered. Now fast fast forward to to now.
Speaker: What's the status of the facility right now? Have you have you replaced it? Has it ended? what What has happened since? We went out and launched the new 9 billion facility with a consortium of 23 banks. And I guess the performance and the perception of the performance in the market was so good that it was significantly oversubscribed.
Speaker: Let us go into the resilience. We see resilience being important for supply chains. How do you look at resilience in in your business? Yes, absolutely. um Look, coming from our journey, right? We know how it feels like when resilience factors aren't factored into your financial strategy when it comes to trade finance. and provision of guarantees that, as we established, are a lifeblood of our company. So what we've done is we have essentially now built a mix of different kinds of facilities, not only the typical one-to-one relationships, bilateral relationships that may break once a crisis hits, but also ah committed facilities that actually help to protect
Speaker: you as a corporate against a rainy day, so to speak, or against a crisis. In my past, I've spent a lot of time in sales, and in sales we talk a lot about customer intimacy. So I think this intimate relationship of the bank with the corporate is probably the most important in such a time of crisis, knowing what the other party really needs.
Speaker: The global reach of HSBC is for everyday business of of essential value because we are talking about in now in this in this format about an existential crisis. Andreas, wow, thanks for spending time with ah with me. a Fantastic journey, really loved it. Big, big thank you from HSBC. Personal thank you. Thank you for the invitation. was lovely to be here. Very nice talking to you.
Speaker: Thank you for joining us at HSBC Global Viewpoint. We hope you enjoyed the discussion. Make sure you're subscribed to stay up to date with new episodes.
