For Valentin Popescu, Head of Treasury, Risk and Insurance, OMV Petrom, the rise through the ranks of one of Romania’s largest corporates has presented plenty of opportunities to learn and grow. With his eye now on encouraging the next generation of treasurers to make its mark, he talks to TMI about what drives him to excel.
Some organisations are sufficiently large and diverse that they offer all or most of what professionals require to continue in their role for many years. For Popescu, who has more than two decades’ service with OMV Petrom behind him, this is definitely the case. And with the oil and gas sector in a state of almost perpetual flux, particularly as it faces up to a shift towards more sustainable activities, he sees only progress as his treasury function helps the business meet these challenges and opportunities head on.
Valentin Popescu Head of Treasury, Risk and Insurance, OMV Petrom
Indeed, one of the duties he carries out today, aside from his traditional corporate treasury responsibilities, is that of managing risk and insurance. While not unheard of for a treasurer, the inclusion of these aspects is rather unusual, and reflects a modern approach to the role.
There is, notes Popescu, an ongoing debate among his peers whether or not risk and insurance management should be integrated with treasury. His own experience is such that throughout his time with OMV Petrom, treasury, and risk and insurance, have made an easy transition from separate to merged functions. “I would say it is simply more efficient to be integrated, as long as segregation of duties remains,” he explains.
While the direct connection between treasury and insurance is minimal, covering perhaps guarantee advisory services for protecting commercial contracts, insurance is naturally well integrated with risk management. Of course, risk and treasury have a direct link, especially around credit risk, FX and interest rate exposure management. Indeed, hedging policies, although implemented by treasury, are often designed by risk management teams.
Popescu notes another compelling connection between treasury and risk: financing sustainability. For the oil and gas sector, this is perhaps one of its most pressing issues of the day. By merging treasury and risk expertise, it is helping to drive a more robust and rapid response, he believes.
Regardless of these additional duties, the fundamentals of treasury still need to be carried out efficiently. Popescu therefore also oversees a traditional front- and back-office function, with a complementary treasury operations team that looks after OMV Petrom’s SWIFT connectivity and its recently established payments factory (the roll-out of which will be finalised in 2022 as the final few banks come on board).
The level of engagement and understanding required to keep all of these distinct yet connected activities at peak performance suggests Popescu is in possession of a great depth of experience and knowledge. His lengthy career within OMV Petrom has certainly stood him in good stead.
Maintaining motivation
Having previously been a senior department manager in treasury, a senior expert in corporate treasury, the head of Cash Management, as well as head of RON (Romanian leu) payments, an economist in OMV Petrom’s financial office, and an IT analyst, he has been exposed to a broad spectrum of the company’s financial activities. This may imply a carefully mapped out long-term career plan within one large organisation, but this is not the case.
Popescu has been asked on occasion how he has preserved his motivation, working in one department over many years. His first response is to cite “an inspirational leader” who saw fit to encourage and promote him into different treasury roles. “I was able to take on and study every aspect until I became a manager,” he recalls.
However, he admits that his earliest forays into OMV Petrom and treasury were never part of a grand plan. For some treasurers, moving from company to company is a logical way to accumulate experience, whereas staying put somehow denies progression. This is not how he sees it. “Looking back, it has felt like I have worked in several different companies; in 21 years a business the size of OMV Petrom can and has changed a lot.”
Indeed, it has moved from public to private ownership (the majority stake sold by the Romanian state in 2004 to Austrian oil company, OMV), it has seen the development of a central operational hub (Petrom City in Bucharest), and it has been on an acquisition trail which has helped it on an efficiency path towards international standards and benchmarks. “All of these changes were opportunities for the business and for me,” he says. “And working in treasury, I have also felt that we have been driving our own agenda, moving ahead of the company and bringing about changes that have become beneficial for all.”
OMV Petrom is not only one of the largest corporations in Romania but it is also the largest oil and gas producer in Southeast Europe. This alone has presented opportunities to explore different commercial areas and geographies. The company is active in every aspect of the energy value chain, including oil and gas exploration and production, fuels marketing and power generation, with operations in Romania, Bulgaria, Serbia, Moldova, and Georgia,.
Eye on the future
With more than 20 years’ experience under his belt, thoughts of moving on have naturally occurred to Popescu, and yet to date he has found no good reason to do so. But what does appeal to him now is finding ways of instilling his passion for treasury in the younger generation and to keep learning and building on his own knowledge.
In treasury there is never a shortage of new challenges, the handling of fallout from the pandemic being a case in point. Popescu adopts a driven yet pragmatic approach to meeting such challenges, acknowledging that no one is capable of being truly expert in all the areas of business that such events touch. Obviously, there is a need to grasp the changing nature of the fundamentals of treasury, he concedes, but if there is an opportunity to gain exposure to an even broader sweep of its activities, then so much the better.
For him, the most important areas covered by his ‘standard’ corporate treasury remit are banking policy, financing, advisory, and his main concern for the coming year, liquidity planning. But to the list he adds the need for greater immersion in two seemingly opposing elements: treasury technology, and the so-called soft skills of people management.
“The soft skills are especially useful when you are involved in projects and you need to promote an idea or encourage colleagues to embrace change,” he explains “I believe that it’s a skill most treasurers will find increasingly important.” On the other side of the coin, he feels that new technology’s advance into the treasury realm is almost unavoidable now, not that it makes sense for anyone seeking progress to avoid it. Indeed, while some departments may try to exist on a diet of spreadsheets, for Popescu it is not possible for a “state-of-the-art treasury” to be without a TMS. “We have experienced being without a TMS, and quite frankly we now see it as an essential tool.”
OMV Petrom’s own TMS deployment has always set out to push the boundaries of efficiency. For example, in the company’s short-term forecasting – three months or less – Popescu notes that pre-TMS, there was “big room for improvement”. With the adoption of a system, treasury can drive considerably more accurate and timely cash and liquidity planning. As a data-intensive process, this can be possible only by integrating the TMS with multiple ERPs. “I’ve known treasurers who want to keep their TMS separate from their organisation’s business and accounting systems. But if you want the best possible short-term cash and liquidity planning, you have to use AI, and that means linking those systems.”
The benefits of OMV’s digitalisation programme to date are being felt now as the conflict between Russia and Ukraine brings additional operational complexity, especially for a treasury located in the region. “The most difficult part now for us is managing instruments like guarantees, letters of credit and standby letters of credit,” says Popescu. “But consequences of the conflict on a global economy level are mainly affecting our treasury activity in the area of liquidity planning, but also in FX and interest rate volatility.” Nevertheless, he adds, “the digitalisation and optimisation of our treasury processes continues and has now become even more critical in this new environment, freeing up more time for special situations.”
Maintaining team spirit
It has perhaps helped in forming his own inclusive view that Popescu is no stranger to the wider concepts around finance, banking, and accounting. He studied these subjects at University, later adding to his academic canon with an MBA from the UK’s Sheffield University. While he stops short of suggesting that broad academic study should be mandatory for all treasurers, he argues that it provides a solid foundation for those considering the profession.
A strong grasp of accounting practices is, he feels, important for every treasurer. In his own career, it has helped him to better understand the impact of the treatment of different instruments, such as factoring, reverse factoring, lease financing and hedging, and even in the design and negotiation of financial covenants under the financing facilities. He notes too that when financial processes such as pooling and in-house cash transfers have been automated, his good grasp of accounting has helped facilitate discussions with the accounting function on the design of efficient record-keeping.
His study of taxation – which he describes as sufficient to give him an understanding of different jurisdictional approaches – has helped him in his approach to inter-company financing, and in defining the best debt and equity financing rates and structure.
Further, he cites his work towards his MBA as having enhanced his practice of the soft skills, so necessary in bringing colleagues on board with the ongoing roster of projects they have undertaken, and in leading his teams more effectively in challenging times. Indeed, during the past two extremely testing years, successfully keeping the team motivated, while at the same time implementing a TMS, bears this out, the results giving Popescu “cause for optimism” about his current and future development plans.
Indeed, while the hardships of the pandemic are clear to all from a personal perspective, there have been some notable opportunities at a professional level, he says. Prior to the pandemic, most internal projects within OMV Petrom were seen as long-term engagements. But the unforeseen operational circumstances it created has, for example, seen its treasury adopt e-signatures, which has led to the setting of an achievable target of a zero-paper office. “And while we’d already started to look closer at in-house cash, now we have the full support of the business to push ahead, with many stakeholders now thinking that their automation projects should be accelerated.”
Of course, challenges needed to be overcome to build the momentum, notably the absence of in-person communication during major negotiations. With Popescu’s work covering operations in several countries in Eastern Europe, this could very easily have given rise to additional obstacles for the team. Fortunately, this was not the case, with regular video meetings scheduled to discuss ideas and maintain team spirit.
“I have the advantage of working with a strong team, and contact throughout the pandemic has been very important,” he explains. In a corporate setting, he believes that no team should operate as an island. Each member of his treasury is therefore empowered to openly discuss every topic, whether positive or negative.
That same openness characterises treasury’s discussions with other functions, and while it’s true that other functions can have their own agendas to pursue, over the years Popescu has developed techniques to bring people on board, key among which is empathy. “When starting a project that requires you to convince another person to do something, you always have to be able to understand their point of view and answer their question, ‘What’s in it for me?’”, he says. “If you can provide every stakeholder with a ready benefit for them, as long as it’s true, it will help project momentum considerably.”
As a case in point, OMV Petrom treasury worked with its procurement colleagues to implement a reverse factoring programme. The key to that function’s buy-in was Popescu’s explanation that for procurement to realise better payment terms with company suppliers without damaging relationships, then this was the best way to achieve it. “It went well,” he states, adding that the clear and concise conveyance of a simple truth places treasury in good stead for future collaboration.
Driving sustainability
It’s another simple truth that a workable policy of sustainability is now central to the continued acceptability of corporate activity. With issues around climate change especially challenging for those in extractive industries, including oil and gas, as part of its Strategy 2030, OMV Petrom is supporting Romania’s energy transition programme.
It was the first Romanian company to back the Financial Stability Board’s Task Force on Climate-related Financial Disclosures. In December 2021, the company announced its ambition to reach net zero operations by 2050. It also committed to a 30% reduction in Scopes 1 and 2 by 2030 and a total reduction of 20% of Scopes 1 to 3 by that same year.
To maintain its transformation, and future growth both domestically and regionally, OMV Petrom has planned investments of around €11bn in the next decade. In addition to funding its large-scale Black Sea exploration and production venture, the firm has committed around €3.7bn to developing cleaner energy technologies such as solar, biofuels, e-mobility, and hydrogen production.
With the firm’s vision subject to ongoing investment at scale, its plans must be underpinned by strong capital discipline. Its treasury function now has a key role to ensure delivery. To this end, Popescu has formulated a two-pillar approach.
First, as might be expected, there is a purely practical response that will see treasury and other functions push ahead with plans for process simplification and digitisation. This is ongoing. The second pillar will ensure green financing is adopted wherever appropriate. “It requires a deeper understanding of the new business activities and of the new instruments available in the financing market,” he notes. “We are getting ready for that in treasury, but we are yet to go to market simply because we still have significant cash reserves.”
Solid future
Being prepared, of course, is part of what treasury is all about. With the world locking down as the grip of the pandemic tightened, it became more important than ever for professionals to keep in touch with events as they unfolded. One of the best resources at such a time, certainly in terms of providing an accessible network to share experiences, has been the national treasury associations.
Popescu was Vice President of Asociatia Trezorierilor din România (ATR) from 2018 to 2021, and is currently partner of the board, his tenure therefore spanning the worst of pandemic times. “It was a difficult period,” he muses. “Previously, all our meetings were in person. The social network is an important part of the work and the deliverables of the association, so during the pandemic we found it even more valuable to continue our meetings, doing so online.”
With perhaps the worst over for many members, one aspect of the association’s efforts that he feels now must be boosted is that of promoting treasury as a career. ATR had already approached a Romanian university offering to provide information and support to prospective candidates, but at the onset of the pandemic resources had to be diverted to support the needs of existing members. Popescu says plans to drive this forward are beginning to re-emerge, and he has high hopes for the future richness and diversity of the treasury community in the country.
In conversation with other treasurers for TMI’s My Life in Treasury profiles, it is apparent that most are willing to share the benefit of their experience with those just starting out. Popescu is similarly inclined, citing as his driving force salutary lessons from mentors early in his career.
One mentor warned him that treasury is a demanding environment where its practitioners, at least in operational activities, “only become famous when they make a mistake”. A second mentor later explained that “treasury is the only part of finance where you deal with real money”. These home truths, he feels, should be taken as a sign that treasury has a responsibility for keeping the heart of a business pumping. It is, he adds, a career that is both demanding and, because it has a direct impact on the business, capable of offering real excitement. It is this that he is now trying to convey to the next generation.
OMV Petrom has a university internship scheme but, notes Popescu, few if any students arrive harbouring plans to work in treasury. Most want to follow paths towards accountancy, audit or tax in a corporate, consultancy or banking environment. “In my discussions with our interns, I have always sought to present treasury as a fulfilling career path,” he says. Success is sometimes forthcoming. Three years ago, an intern directly from university embraced a treasury career, becoming one of the key team members of OMV Petrom’s TMS implementation. Such actions give Popescu optimism for the future of treasury.
“It is a niche role, but one that has become extremely important over the past few years,” he says. With many corporate efficiency projects such as digitisation and automation being necessarily embedded in treasury operations, he feels there is “even more excitement” on tap for the right candidates.
For those considering ignoring what’s on offer within treasury and embarking instead on careers in accounting, Popescu offers a slightly tongue-in-cheek warning, suggesting that in the not-too-distant future, “most of the accountancy profession will be run by robots”.
Of course, he has no such reservations about the future of treasury. Being characterised by “trust, passion, and a mindset for efficiency”, and driven by a need for its practitioners to draw upon a wide range of skills, he aims to continue bringing his energy and enthusiasm to the role for some time to come.
