Daily treasury operations include management of foreign exchange for the different currencies that are needed by Shell around the world. Treasury also advises on the financing of Group subsidiaries and joint ventures and manages the Group’s surplus funds and external bank accounts. It is also responsible for issuing external and internal guarantees to ensure contractual and regulatory obligations are met and that Shell’s licence to operate is maintained.
Oil, gas and renewables projects, which can take years to develop, need significant capital. Our operating companies require a balance between equity and long-term loan funding. We have capitalised Group lending entities in the Netherlands, the UK and Singapore to provide loan financing. We ended our Bermudan lending activities in mid-2020, after reviewing our presence in this low-tax jurisdiction.
Treasury reviews the funding needs of Shell’s operating companies around the world on a case-by-case basis to ensure there is an appropriate mix of equity and debt. Treasury manages deposits from operating companies that generate cash. This cash, the returns from operating companies plus external debt, is used to provide long-and short-term funding including loans with interest due and paid as if these loans had been sourced from external financial markets or institutions.
Related-party lending, borrowing, guarantee offers and acceptance, and governance processes are decided by the boards of the Shell lending and borrowing companies respectively, independently and on a standalone basis.